JD Wetherspoon Plc warns of low pretax profits

British pub chain JD Wetherspoon Plc has warned of low pretax profits in the first half of its fiscal year, according to Reuters.

The chain has been fighting against higher costs as a rise in the minimum wage rate, growth in property prices and a Brexit-related fall in the strength of the pound have combined to make trade challenging. There is also a trend towards young people in the UK drinking less alcohol.

In November the chain said it would be raising pay for employees, as well as adjusting prices to allow for a new sugar tax on soft drinks.

Chief Executive Tim Martin said: “Costs, as previously indicated, are considerably higher than the previous year, especially labour, which has increased by about 30 million pounds in the period.”

JD Wetherspoon has over 900 pubs in Britain and Ireland, with plans to open a further 5 to 10 sites in this financial year.

The chain said despite the lower profits, like-for-like sales rose 7.2% in the 12 weeks to 20 January 2019, showing there was strong demand in the Christmas period. Rival Marstons Plc reported a 5.7% rise in its Christmas sales for the 16 week period leading to 19 January.

Primark exceeds expectations and plans expansion

Further Primark stores will continue to open, despite the retail giant seeing a dip in full-year profits.

However although the stores profits are thought to have fallen 8 per cent, like many of its competitors – it decided to absorb increases in costs.

The low-priced clothing store decided to absorb not only the increased rate of VAT , but also the almost doubling cotton prices.

Primark saw like for like sales increase 3 per cent – luring shoppers in by focusing on value and increasing promotions.

Despite tough times Primark’s chef executive, George Weston said there are ‘exciting’ opportunities to expand and open new outlets in all of the coutries where is trades, including Ireland, Spain, the Netherlands and Germany.

Over the past ten years Primark has doubled store numbers to 223, with 19 opening last year – 11 of these in the UK.

ABF (Associated British Foods) which also makes Twinings tea, Silver Spoon sugar and Kingsmill bread, said group profits were up 1 per cent to £920million as it benefited from higher margins in its sugar production arm.

The grocery division saw profits increase 9 per cent to £249million, driven by a strong performance from Twinings, which is the fastest growing tea brand in the United States.

Martin Deboo, an analyst at Investec, said ABF’s profits were better than the City expected, driven by a strong performance from its sugar division.

‘This reflects a difficult year by Primark’s standards, driven by margin pressure from weak consumer demand and rampant cotton prices.’

Shares rose 26p (2.3 per cent) to 1,138p after it said it expects further growth in the current year.