LONDON (Reuters) - J D Wetherspoon’s (JDW.L) eurosceptic boss said customers were unfazed by political wrangling over Brexit after the pub group reported a rise in full-year sales and profit thanks to demand for products from pink gin and coffee to breakfast and beer.
Britain’s Wetherspoon, like most pub and restaurant chains, has been battling increased costs due to a minimum wage hike, higher property prices and power bills. It has also been investing in its more labour-intensive food and coffee business.
It has, however, managed to attract patrons to its nearly 900 pubs in Britain and Ireland as it keeps drinks prices low, such as its latest move to sell a pint of Ruddles bitter for as little as 1.39 pounds ($1.73) in some locations.
Pre-tax profit after exceptional items rose to 95.4 million pounds ($118.5 million) for the year ended July 28 from 89 million pounds a year earlier, although before exceptional items, it fell 4.5% to 102.5 million pounds.
“Costs were quite high as we invest in the business and gardens and kitchens and people,” Chairman Tim Martin, a vocal Brexiteer, told Reuters.
Total sales rose 7.4% to 1.82 billion pounds, while like-for-like sales rose by 6.8%, with a jump in bar and food sales.
Martin, one of the most prominent Brexit backers in British business, said he currently anticipated a “reasonable outcome” for the current year.
The British government outlined its worst-case scenario if the country leaves the European Union at the end of October without a deal, including snarl-ups at the ports and a shortage of some fresh foods in a document released on Wednesday.
Supermarket bosses have voiced similar concerns about the impact on supply chains and costs.
Martin, who said leaving without a deal would enable Britain to eliminate tariffs on more than 12,000 non-EU products, said such claims were politically motivated.
“I think they are just remainers, I think that’s what it is,” he said. “You’ve had a whole year of different people saying food prices are going to rise if we leave the EU, it’s counter-intuitive to put it mildly.
“If you eliminate tariffs on food, prices can’t go up.”
Similar gloomy predictions had been made when Britain did not join the euro, he said, “but the public didn’t fall for it”.
“I don’t think any more people really do believe there’s going to be massive delays at ports,” he said.
Wetherspoon has replaced some products in its pubs that traditionally come from EU countries with domestic equivalents or from other countries, such stocking English sparkling wine.
“Anything you buy from the EU you can buy from the rest of the world or the UK,” Martin said.
Wetherspoon’s like-for-like sales rose 5.9% for the six weeks to Sept. 8. Martin said growth had come from the sale of coffee, real ale and also gin.
“Everyone is drinking gin. Even the guys from the building sites down the road are drinking pink gin with strawberries,” he said.
Senior market analyst Fiona Cincotta at Cityindex said the company had fared a lot better than many of its rivals.
She warned however that the rate of sales growth had slowed, putting more pressure on the company’s already-thin margins.
“J D Wetherspoon may be attracting plenty of people into its pubs but it’s luring them with such cheap prices that its margins have deteriorated,” she said.
Wetherspoon has largely grown organically, often opening pubs in locations such as former banks and cinemas.
The wider British pub sector is brimming with deals, with Greene King set to be bought by Hong Kong’s Ck Asset (1113.HK) for 4.6 billion pounds, while Slug and Lettuce pub chain owner Stonegate has agreed to buy Ei Group (EIGE.L) for 1.27 billion pounds.
($1 = 0.8048 pounds)
Reporting by Noor Zainab Hussain and Tanishaa Nadkar in Bengaluru and Paul Sandle; Editing by Jan Harvey and David Evans