Pub giant JD Wetherspoon expects plunge in profits, warns company boss

Picture: Paul Jacobs (142476-229) PPP-140824-032155001

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PUB giant JD Wetherspoon has warned over profits for the second time in two months after being hit by rising staff costs.

The group saw its shares tumble by nine per cent after chairman Tim Martin said full-year profits were now set to come in at the lower end of expectations, despite a rise in trade over Christmas.

Wetherspoon - which claims its wage bill makes up around 25 per cent, or 75p, of every pint sold in its pubs – said staff costs were likely to knock around 1.1 per cent off its underlying operating margin for the six months to January 24.

It said this follows moves to raise the starting rates for hourly-paid staff in October 2014 and August 2015, which saw their wages rise by around 13 per cent overall.

The latest profit alert comes after Wetherspoon warned in November that staff costs could see annual profits drop slightly on the previous year.

But Wetherspoon said it saw improved trading in its Christmas quarter, with like-for-like sales up 3.3 per cent in the 12 weeks to January 17.

So far in the first 25 weeks of its half-year, sales in established pubs are up 2.8 per cent.

Mr Martin said: ‘Our current view is profits for this year are likely to be towards the lower end of analysts’ expectations.’

Wetherspoon spokesman Eddie Gershon also confirmed this week that no movement has still yet to be made over Portsmouth city centre pub The Trafalgar, and it is still trading as a Wetherspoon.

It was put on the market along with 33 other Wetherspoon boozers in the UK last year as part of a ‘periodic review’ of its stock.

Company boss Tim Martin has said the pubs have up to 30 per cent poorer sales than others it operates.