Profits at JD Wetherspoon rose 7.4% in the year to £1,818.8m in the year to July 28, the company has reported today.
Profit before tax was down 4.5% to £102.5m, however, after exceptional items, profit rose 7.2% to £95.4m. The company has 879 pubs.
Steve Miley, senior market analyst at www.asktraders.com, said: “JD Wetherspoon may be attracting plenty of people into its pubs, but it’s luring them with such cheap prices that its margins have deteriorated.
“The company is faring a lot better than many of its pub sector peers and its sales have held up reasonably well in the early part of the new financial year. But the rate of sales growth has slowed, putting more pressure on the company’s already thin margins.
“A focus on sales, and beefing up market share, could end up paying off, should cost pressures ease. We’re seeing little sign of that in today’s result, with operating costs rising in the second half compared to the first.
“The pub sector is, of course, suddenly back in favour in the wake of Hong Kong billionaire Li Ka Shing’s bid for Greene King, though that likely had as much to do with weakness in the pound as it did with the sector’s immediate growth prospects.
“JD Wetherspoon’s shares, trading at 20.5 times earnings based on today’s results, are more highly valued than many of its sector peers, making the company itself no cheap meal.”