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J.D. Wetherspoon sees ‘bumper’ profit growth, but warns of higher food and drink costs
JD Wetherspoon posted record annual results this morning following what analysts have dubbed a “bumper time for British publicans”, but boss Tim Martin warned that pints at the pub chain will become more expensive after Brexit.
Pre-tax profits rose by 4.3% to £107.2m, while annual revenue was slightly higher at £1.7bn.
“Growth cooled off over the hot summer – full year sales growth came in at 5% on a like-for-like basis, slower than the 5.2% registered in the nine months to the start of July,” Martin told the BBC.
The news comes as JD Wetherspoon has begun to phase its stocks of EU-made products over the next two years, replacing them with those made in the UK or outside of Europe as Brexit looms.
The pub chain said it will stop selling German liqueur Jägermeister from 26 September. It will be replaced with Strika, a herbal liqueur produced in the UK by Halewood International, which also makes Lambrini, Red Square vodka, and The Pogues Irish whiskey. French brandies Courvoisier VS and Hennessy Fine de Cognac will also be scrapped and replaced with brands from the US and Australia.
The company has already started replacing some of its more loss-leading EU-made products with non-European counterparts. It replaced Champagne with sparkling wines from the UK and Australia in its pubs earlier this year as well as German wheat beers with those from the UK.
However, the statement released in June made no mention of axing Prosecco from the range.
Martin claimed on Wednesday that swapping to non-EU products would make its drinks cheaper for customers, but warned that labour and interest costs were expected to be higher than last year, saying that the price of food and drinks “might have to go up a bit.”
Fiona Cincotta, a senior market analyst at City Index, noted that the company did not raise its dividends over the 12 months to 28 July, indicating that execs are “wary of cost and demand pressures potentially biting in the years ahead.”