May 8, 2019

Slowing sales growth weighs on JD Wetherspoon

Pub chain JD Wetherspoon reported rising sales in its most recent quarter, but shares slid as the rate of growth slipped over the spring. The focus on sales is particularly acute given that Wetherspoons, like much of the rest of the hospitality industry, is grappling with rising labour costs which weigh on profit margins. Wetherspoons last year said it would increase staff wages as UK salary levels shift upwards after years of stagnation. Tim Martin, chairman, said the group continues to expect trading for the financial year to be in line with previous guidance, but following Wednesday's update Liberum said: "Our confidence in the full year outcome is declining, from already low levels." Wetherspoons differentiates itself by a focus on its affordable pricing, but Liberum said higher profitability and margins will require price rises going forward.

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