LONDON (Reuters) - A typically wet British summer helped to boost sales at British pub chain J D Wetherspoon (JDW.L), allowing it to build on an increase of almost 28 percent in annual pre-tax profit.
Shares in the company surged more than 13 percent to hit a record high of 1186p as investors warmed to the results and the trading update.
“When the weather turned bad in the school holidays our sales actually went up, which is slightly unusual,” Chairman and founder Tim Martin told Reuters on Friday.
“It’s hard to know if we did something brilliant, which we haven’t noticed, or it was just a very good short trading period for some other reason, maybe staycations.” Martin added, referring to the trend for Britons to take holidays closer to home.
Profit before tax and exceptional items for the 53 weeks to July 30 rose 27.6 percent to 102.8 million pounds.
Total revenue increased 4.1 percent to 1.66 billion pounds, with the biggest increase coming from food sales.
Wetherspoon said strong sales have continued into its new financial year with comparable sales up 6.1 percent, although injecting a note of caution for the coming months.
“This is a positive start, but is for a few weeks only - and is very unlikely to continue for the rest of the year,” Martin said.
The company reiterated it would need like-for-like sales growth of about 3 to 4 percent to maintain profits at the same level next year.
“It’s what we are shooting for, “ Martin said of the sales target.
“We are hopeful but after six weeks we can’t say for certain we’ll get that level of sales.” he cautioned.
Analysts at Peel Hunt said Wetherspoon’s investment in breakfast trading, kitchens, beer gardens and accommodation, assisted by a disposal programme that saw 41 pubs sold or closed, had paid off.
The broker said it would upgrade its forecasts by 5 percent to reflect the better-than-expected 2017 result and strong start to the company’s new financial year.
But it kept its “reduce” rating on the stock in light of the valuation and consumer outlook.
Rahul B contributed reporting from Bengaluru; editing by Keith Weir