Pub chain is cautious as Christmas sales drop
Jan 23 2008 by Iain Laing, The Journal
PUB group Wetherspoon has reported a drop in demand for premium lagers and spirits after like-for-like sales fell over the festive period.
With 2007 seeing the start of smoking bans in England, Wales and Northern Ireland, Wetherspoon said its benchmark sales figure was down by 3.2% in the 11 weeks to January 13 – sharper than the 1% drop posted in the autumn.
Bar sales were most under pressure, but Wetherspoon said this was partly offset by upturns in demand for food and coffee. Real ale also enjoyed a revival, but sales of premium lagers and spirits were lower.
Wetherspoon pubs, which are open from 9am, sold one million coffees and teas in the Christmas fortnight.
Yesterday’s update is in line with the experience of other operators, following subdued festive trading reports from chains including Punch Taverns, Enterprise Inns and nightclub operator Luminar.
Wetherspoon said: “We continue to remain cautious regarding the outlook for this financial year.”
However, it added that it remained confident non-smoking pubs will see growth in both bar and food sales in the medium and long term. The first month of the smoking ban in England produced better-than-expected sales in July, but figures have shown signs of pressure since then.
The company’s caution has been highlighted by its opening programme, with 25 new pubs due in the current financial year to the end of July.
That is slightly lower than previously indicated, with some openings now likely to take place in the next financial year.
Wetherspoon, which operates from around 650 sites, reported a 6% rise in pre-tax profits to £62m in the year to July 29, with like-for-like sales up 5.6% during the period, buoyed by growing food sales.
It said that margins declined by 0.6% in the first quarter of its financial year, but this figure is expected to improve for the half year as a result of lower energy and maintenance costs.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “Even this traditionally defensive sector of the market is suffering as consumers continue to rein in their spending and the full impact of the smoking ban becomes evident. Like-for-like sales are down and management, understandably, remain cautious.”
