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JD Wetherspoon reports like-for-likes up 6.1% in Quarter One: JD Wetherspoon has reported like-for-like sales increased by 6.1% and total sales by 4.3% for the 13-week period up to 29 October 2017. The company stated: “The underlying operating margin, excluding property gains, was 8.6%, although one-off items increased that number in the quarter. Our expectations for the full year operating margin are unchanged. The company has opened two new pubs since the start of the financial year and has sold six. We intend to open between ten and 15 pubs in the current financial year. The company remains in a sound financial position. As previously indicated, the long-term aim of the company is for debt to Ebitda to be in the range of zero to two times. With very low interest rates, we are comfortable with recent levels of about 3.5 times, which are modest in comparison with our main competitors, and are regularly reviewed.” The chairman of Wetherspoon, Tim Martin, said: “A key issue for investors and the public is the impact of Brexit on the economy. In this connection, statements have been made by some senior PLC directors and trade organisations which are factually incorrect and highly misleading. Unsurprisingly, the misinformation has been adopted by many among the media, investors and the public, as if it were true. For example, the chairman of Sainsbury’s, David Tyler, was recently quoted in the Sunday Times in an article headed “Sainsbury’s warns of ‘no deal’ Brexit cost”. The clear implication of the chairman’s words and the conclusion of the article were that a deal with the EU was necessary to avoid higher food prices. In fact, that is completely untrue. The lowest food prices can be obtained by the UK, without the need for the agreement or consent of any third party, by avoiding a ‘transitional deal’, which would keep EU tariffs in place, and leaving the EU in March 2019. This would enable the UK to scrap EU food tariffs, as permitted under World Trade Organisation rules, on food imported from outside the EU. Under WTO rules, tariffs would not then be charged on imports from the EU either. Wetherspoon calculates that this approach would reduce the average cost of a meal by about 3.5 pence and the cost of a drink by 0.5 pence. Another example relates to an article in the Evening Standard in which the chairman of Whitbread, Richard Baker, on behalf of the BRC, and the head of the CBI, Carolyn Fairbairn, create a similarly misleading impression. This sort of misinformation has also resulted in articles such as the one in the Guardian (Appendix 3) and the Financial Times (Appendix 4) in which the writers wrongly assume that reversion to WTO rules, on leaving the EU without a deal, would axiomatically result in the imposition of tariffs. It is not true, for example, as the Financial Times states, that tariffs of “13% on salmon, 14% on wine, 40% on cheese and 59% on beef”.... must apply to all countries outside the customs union, unless a free-trade agreement is in place. The misinformation from directors and trade organisations seems to be designed to support the view that staying in the EU for an additional two years is necessary to avoid a ‘cliff edge’. There is no cliff edge. Wetherspoon, for example, is ready now to leave the EU, since almost no preparation is required – as is almost certainly the case for Sainsbury’s and Whitbread, and the vast majority of companies. Although it is only a short period, the company has had a positive start to the year. Sales have continued at a slightly higher-than-expected level since we last reported on 15 September. Costs, as many pub and restaurant companies have indicated, have been significantly higher than last year, and further increases are expected in areas including labour, business rates, utilities and sugar taxes. We will provide updates as we progress through the current financial year, but we currently anticipate a trading outcome for the current financial year in line with our expectations.”