Wetherspoon's second-half outlook hits shares

By Dan Lalor

LONDON (Reuters) - Pubs firm JD Wetherspoon (JDW.L: Cotización) said rising costs meant it was slightly more cautious on the outlook for its second half, when it expects like-for-like sales to fall 3 percent, knocking its shares on Friday.

Wetherspoon met forecasts with a 13 percent fall in pre-tax profit to 28.5 million pounds in the 26 weeks to January 27, on turnover up 0.4 percent to 440 million pounds. Like-for-like sales fell 2 percent.

Chairman Tim Martin used the occasion to lambast attitudes to social drinking in Britain, saying media coverage of drunken partying by sports stars and other celebrities led to copycat antics by the public.

Chief Executive John Hutson said like-for-like sales would continue to fall as customers are still adapting to the July 2007 smoking ban in England.

Trading at Wetherspoon pubs since the ban has seen strong growth in food sales and a decline in bar sales.

Hutson said higher food costs meant Wetherspoon's second-half operating margin would be lower than the 10.1 percent seen in its first half. The fall will be no more than 1 point and is likely to be less than that, he said.

Wetherspoon shares were down 9.9 percent to a seven-week low at 281 pence by 9:35 a.m.. Its shares, along with pub rivals such as Punch (PUB.L: Cotización) and Enterprise Inns (ETI.L: Cotización) have been in freefall since last spring, in the run-up to the smoking ban and since the first signs of a decline in consumer confidence.

KBC Peel Hunt analyst Paul Hickman repeated his "sell" rating on Wetherspoon stock, saying the sales forecast "is a change from previous guidance that the smoke ban impact was expected to diminish going forward."