Wetherspoon profits hit by smoking ban

By Matthew Scuffham

LONDON (Reuters) - Pubs group JD Wetherspoon (JDW.L) reported a decline in full year profits on Friday, adding to the gloom in the sector following downbeat updates from Punch Taverns (PUB.L) and Greene King (GNK.L) this week.

The group, which has nearly 700 pubs in Britain, reported an 11 percent decline in adjusted pretax profit to 55 million pounds in the year to July 27, in line with the consensus forecast according to Reuters Estimates.

Britain's pubs have been hit hard by last year's smoking ban, rising costs, and declining consumer spending, while cheap alcohol offers in supermarkets and the miserable summer weather have further encouraged drinkers to stay at home.

Since the smoking ban came into force on July 1 last year, Wetherspoon has seen strong growth in food sales and a decline in bar sales. Nearly a third of revenues now come from food, with a further third coming from drinks ordered alongside food.

Total sales increased by 2.1 percent to 907.5 million pounds during the year. Like-for-like food sales rose by 7.9 percent but comparable bar sales were down 4.3 percent, resulting in an overall like-for-like sales decline of 1.1 percent.

Chairman and founder Tim Martin said that, in common with many pub and restaurant businesses, the company is expecting a considerable increase in energy, food, labour, and tax costs this year.

In an interview with Reuters, Martin called for beer duty to be held at current levels for the next five years to encourage drinkers back into Britain's beleaguered pubs.

"We've already got the highest excise duty in Europe for beer. I want a moratorium for five years. No more tax increases until we're on a par with other countries," he said.