May 3, 2017 / 6:28 AM / 9 months ago

Pubs operator JD Wetherspoon sees sales driving better annual performance

(Reuters) - British pubs group JD Wetherspoon forecast a slightly improved annual trading outcome compared with previous expectations thanks to a robust sales performance this year, boosting its shares.

The owner and operator of more than 900 pubs in Britain and Ireland said its third-quarter like-for-like sales for the 13 weeks to April 23 increased by 4 percent, higher than the 3.8 percent advance seen last year.

Sales have held up despite signs from other British companies that rising inflation was making consumers cut back on spending.

Wetherspoon, however, reiterated its warning of “significantly higher” costs in the second half of the year and estimated it would need comparable sales growth of about 3 to 4 percent in the next year to maintain profit levels, as a result of the higher costs.

It expects higher costs in the latter half of the year related to business rates, utility taxes, excise duty and staff. Its financial year runs until the end of July.

The company’s shares rose 2.4 percent by 0730 GMT and were the top gainer on the FTSE 250 midcap index.

“We believe the group’s value positioning and significantly higher investment per pub are two of the main factors behind the group’s outperformance,” Investec analyst Karl Burns said.

Pub operator Mitchells & Butlers Plc recently reported a steady start to 2017, crediting ‘particularly strong’ trading over the festive period.

Wetherspoon has been battling higher costs related to its purchases made in currencies other than the pound following the decline in the value of sterling since last June’s Brexit vote.

Measures in the government’s March budget would add an increase in taxes and duties of at least 20 million pounds next year, Wetherspoon said at the time.

Reporting by Rahul B and Abinaya Vijayaraghavan in Bengaluru; editing by Jason Neely/Keith Weir

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