Investing.com -- Shares in British pub operator JD Wetherspoon jumped over 8% on Friday after the company reported stronger recent sales and said it expected full-year profit to meet market forecasts, helping offset a 28% drop in annual profit as higher costs weighed on margins.
Recent trading was stronger, with like-for-like sales rising 8.6% in the nine weeks to Sept. 27. Chairman Tim Martin attributed some of the increase to hot weather.
Wetherspoon said it continued to expect full-year pre-tax profit before separately disclosed items to be in line with current market expectations. Company-compiled consensus forecasts put 2027 financial-year profit on that basis at £74 million.
Like-for-like sales rose 7.7% in August.
Wetherspoon reported pre-tax profit before separately disclosed items of £58.6 million for the 52 weeks ended July 26, down from £81.4 million a year earlier.
Operating profit on the same basis fell to £120.2 million from £146.4 million, mainly because costs rose 5.3%. Repairs accounted for £31 million of costs, while business rates added £9 million.
Revenue rose 5.2% to £2.24 billion from £2.13 billion, while like-for-like sales increased 4.2% for the year. Bar sales rose 6.1%, while food sales increased 1.2%.
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Basic earnings per share before separately disclosed items fell to 42.4 pence from 50.8 pence.
After separately disclosed items, pre-tax profit was £77.7 million, compared with £89.3 million a year earlier. Operating profit fell to £120.6 million from £142.2 million, while basic earnings per share were broadly unchanged at 59.5 pence versus 60 pence.
Wetherspoon recorded a £19.1 million separately disclosed gain, compared with £7.9 million a year earlier.
The gain included £13 million from changes in the value of interest-rate swaps and £7.8 million from moving part of a hedge reserve into the income statement, partly offset by a £2.4 million charge related to property disposals.
The pub operator proposed a final dividend of 8 pence per share, taking the full-year dividend to 12 pence, unchanged from the previous year.
Free cash inflow increased to £100.1 million from £56.6 million, helped by a £33.5 million increase in working capital. Net debt excluding lease liabilities stood at £715.8 million at year-end.
The company spent £46 million buying back 6.96 million shares for cancellation, while total capital investment fell to £74.2 million from £117 million.
Wetherspoon had 792 pubs at the end of the year, two fewer than a year earlier, following eight openings and 15 disposals. It also opened 15 franchised pubs, taking the total to 23, and plans to open a further 15 to 20 in the current financial year.
The company repaid a £98 million private placement on Aug. 20 and said it would not renew the borrowing for now. It also agreed a new £25 million banking facility and entered into a £500 million interest-rate swap running from February 2030 to February 2032 at 4.45%.
Original Article
Wetherspoon shares jump 8% as strong sales support profit outlook
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