JD Wetherspoon has posted a strong performance for the first half of its financial year.
The pub chain announced a nine per cent increase to £744.4 million in takings for the six months to January 25th. This culminated in a 4.1 per cent rise in pre-tax profits to £37.5 million and has allowed the company to continue its expansion plans. The company currently has over 920 outlets across the UK with more expected.
In the coming months, Wetherspoons is set to open a further 15 pubs in various towns and cities around the country. A main focus of this latest batch of pub openings is around major transport hubs with The North Western outlet launching at Liverpool Lime Street station in July as well as The Windmill at Stansted Airport in March.
Despite the positive results, Wetherspoons is still facing stiff competition from supermarkets. Chairman Tim Martin explained that pubs have to constantly try to fend off the major retailers which provide a different option for consumers. However, Wetherspoons' food sales grew by 10.1 per cent highlighting the positive performance of its food and drinks market.
Mr Martin added: "The first half of the financial year resulted in a reasonable sales performance and free cash flow, although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff."
Taking on the coffee market
One of the main campaigns for Wetherspoons is taking on the UK's coffee market. Mr Martin explained that he wants the company to take on food outlets such as Pret A Manger as it looks for new sources of growth.
The Wetherspoons founder wants the company to treble its coffee sales and breakfasts over the coming 18 months as it invests further in its day market. The pub chain already serves 50 million coffees and teas and around 24 million breakfasts every year but wants to increase this number by reducing prices.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.