Wetherspoon says profit may miss forecasts as cost pressures weigh
Profit Warnings and Financial Impact on JD Wetherspoon
Recent Profit Warning and Sales Performance
May 6 (Reuters) - JD Wetherspoon issued its third profit warning in five months on Wednesday as substantial cost increases weighed on the pub chain, and led to third-quarter sales growth lagging its year-to-date pace.
Impact of Energy Prices and Economic Conditions
A surge in energy prices triggered by the Iran war is poised to further compound difficulties for Britain's hospitality sector, which is struggling with weak consumer spending and increased costs.
Effect on Households and Broader Economy
Households are bracing for higher prices for basic necessities from food to fuel as costs eat into budgets and add to signs of economic fallout from the Iran war.
Company Performance and Cost Increases
The group, known for its relatively low prices, reported a 3.4% rise in like-for-like sales in the 13 weeks to April 26, while year-to-date comparable sales climbed 4.3%.
Wetherspoon, which had already warned in March that full-year profit could miss expectations, previously said higher wage-related taxes will increase costs by about 60 million pounds ($81.52 million) annually and energy prices will add around 7 million pounds.
Energy Hedging and Ongoing Vulnerabilities
The company has hedged its energy costs until 2029, however it remains vulnerable to non-commodity price rises, such as network charges and government levies.
Analyst Expectations and Currency Information
Analysts expect it to record pre-tax profit of 72.8 million pounds for the year through July, according to LSEG data.
($1 = 0.7363 pounds)
($1 = 0.7361 pounds)
(Reporting by Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Louise Heavens)
