Leading analyst Simon French, of Cenkos, has suggested that JD Wetherspoon is likely to report full-year pre-tax profits up 2-3% on expectations.
The group yesterday issued an unscheduled trading update indicating that recent sales performance has been “slightly better than expected”.
JDW said that while there were still seven weeks of the current 53-week financial year to go, the signs were that sales were stronger than had been indicated in the last update.
The company continues to anticipate it will require like-for-like sales of about 3 to 4% in its next financial year to maintain profits at this year’s levels.
French said: “We note that consensus estimates prior to yesterday were for c£89m PBT (NB FY 2017 is a 53 week year) and we expect these to increase c2-3%; we currently forecast £89.4m PBT. The group reiterated that it will require LFL sales growth of 3-4% in FY 2018E to maintain profit at FY 2017E levels (on a 52-week basis). We note that 12-months ago CPI was 0.5% compared to 2.9% today and given most of JDW’s cost of goods sold are on CPI-linked contracts we think the group will struggle to pass price increases on to the consumer in an environment where real wages are slightly negative compared to strongly positive this time last year.”
JDW will issue its pre-close trading statement on 12 July.
