JD Wetherspoons cut back on expansion after poor sales

JD Wetherspoon, the nationwide pub chain, is to slow down its pace of expansion amid the slower sales and sustained pressures of costs that is has suffered so far in 2012.

The group, which had at the end of January 841 pubs, is intending to reduce the number of new pubs opening to about 40 in the year that ends on 31st July, compared with the previously expected figure of around 50.

The caution also reflects the groups anger over the further alcohol duty hikes that are expected in the budget later this month. With VAT, corporation tax, employee contributions and other duties, Wetherspoon has said that its tax burden has increased to £250.1m, or 43.9% of the sales they have made to the 6 months ending 22nd January, compared with the £225.7m, or 43%, during the same period in the previous year.

The group had reported an 11% rise in their pre-tax profits of £35.5m for the first months, but have said that sales have been disappointing since then. On a like for like basis, revenues had fallen by 0.7% in the 6 weeks ending 4th March, while profit margins seem set to fall further due to the continuing pressures of costs.

Tim Martin is the chairman of Wetherspoons, and he has said that they are having to be slightly more cautious about their potential outcome during the current financial year. He also renewed his attack on the tax regime that is currently in existence, saying that supermarkets in particular where able to cross subsidise the prices of drinks as they didn’t face the same burden as pubs, who currently pay VAT of 20%.