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.
British diversified investment holding Guinness Peat Group Plc (LON:GPG) said on Thursday it had exited domestic pub operator Young & Co’s Brewery Plc (LON:YNGA) after selling its entire holding in it for around GBP54m (USD84m/EUR67m).
Guinness Peat said it had sold, through its fully-owned unit GPG (UK) Holdings plc, 4.47m series A ordinary Young & Co’s shares at GBP5.50 apiece and 6.54m non-voting ordinary shares at GBP4.50 per unit through an accelerated bookbuild run by Barclays Bank Plc and JPMorgan Securities Ltd.
The vendor announced the plan to sell its entire Young & Co’s stake earlier today, saying the move was in line with the strategy announced in February 2011 to orderly realise its investment portfolio.
Commenting on the completion of the sale, GPG’s chairman, Rob Campbell, said the stock was sold at a discount and below their book value of GBP64m as at 31 December 2011, but the realised price was still a reasonable value return to shareholders given the previously illiquid nature of the shares.
GPG will use the cash to help pursue its announced capital management initiatives, Campbell added.
The company expects to complete the placing on 19 June pending customary conditions, with the payment to be settled in cash.
Young & Co’s had 219 pubs as of 29 March 2010.