(Reuters) -UK pub group J D Wetherspoon reported a return to annual profit on Friday, although slower sales growth in recent weeks dented its share price after a rally this year.
The pub group, sometimes referred to as “Spoons”, said it was seeing strong demand for its lower-than-average priced drinks and foods. Like-for-like sales rose 9.9% in the first nine weeks of the current financial year to Oct. 1, but that was slower than an 11% rise in the final quarter of last financial year.
The group’s shares, up nearly 60% this year, fell nearly 5% at one point in morning trade.
Resilient customer spending and price increases have helped the UK hospitality industry deal with high costs, but an ongoing cost-of-living crisis remains a threat as cash-strapped shoppers cut down on discretionary spending.
“The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance,” Chairman Tim Martin said in a statement.
Wetherspoon had said in July that results for the fiscal year 2024 were expected to be better than a year ago.
“We retain our concerns over long-term compression in margins given changing sales mix exacerbated by inflationary environment which limits the recovery potential,” analysts at Libeirum said in a note.
Wetherspoon’s operating margin rose to 5.6% in the year ended July 30 from 1.5% the previous year, helped by easing costs of raw materials and energy, but remained below pre-pandemic levels of 7.3%.
J D Wetherspoon, which owns and operates pubs across the UK and Ireland, had offloaded some pubs to keep a check on costs and reduce debt last year, leaving 826 pubs trading in the 2023 financial year.
The group said profit before tax for the year ended on July 30 was 42.6 million pounds ($51.96 million), reversing a 30.4 million pound loss a year earlier.
Peer Mitchells & Butlers last week reported a rise in annual sales growth, as more customers stepped out to grab drinks and food at its pubs.
($1 = 0.8198 pounds)
(Reporting by Radhika Anilkumar in Bengaluru; Editing by Krishna Chandra Eluri and Susan Fenton)