JD Wetherspoon has this morning reported a 0.3% fall in first half like-for-like sales.
The group saw a 21% rise in first half pre-tax profit excluding exceptionals to £27.4m for the period.
Turnover was up by 1% to £406.3m. Operating profit increased by 15% excluding exceptionals to £39.7m. The operating margin before interest and tax increased to 9.8%, from 8.6%, due to lower head office costs and improved pub profits.
Total capital investment was £15.9m and net gearing was 149%.
The group said that it remained cautious over trading in the second half of the year.
Like-for-like sales in February increased by 1.9%, against a decline of the same amount in February 2005.
Tim Martin, the company's chairman, said: “In the light of our strong earnings and cash flow, combined with our continued concentration on making many small improvements to the business, I remain confident of the Company's longer-term future prospects.”
Referring to the proposed smoking ban, Martin added: “It is clear from our experience and from the evidence of other areas, such as Ireland, California and New York, that the initial effect of a smoking ban can result in sales and margin declines.
“However, we believe that sales and margins can recover over time, once customers adjust to the non-smoking environment.”
The company operates 49 non-smoking pubs: 37 were existing pubs which reopened as non-smoking pubs between March and October 2005. 12 are new pubs which opened for the first time in the last year.
Like-for-like sales in the converted pubs were down by 7.6% in the quarter ended 22 January 2006. The company had planned to convert its estate to non-smoking by May 2006, however, it will now wait until the smoking ban comes into effect, expected in mid-2007.
In the meantime, new pub openings will continue to be non-smoking and conversions already in the pipeline will be completed.
The first half saw the opening of five new pubs. The group's full year openings target is approximately 13 new sites. Six pubs were sold, leaving the estate at 654 pubs.
Over the six months the company purchased 7.8 million of shares for cancellation at a cost of £24m.
