British pub group JD Wetherspoon reported a more than 10 per cent rise in annual adjusted pretax profit on Friday, helped by resilient demand for its budget-friendly drinks and pub grub.
After a post-pandemic recovery in sales, the British hospitality sector is under renewed pressure as high inflation and rising living costs threaten to curb consumer spending.
The upcoming budget in November has also raised fears of potential tax hikes, adding to cost burdens from higher wages and national insurance contributions.
“Cost increases such as these will undoubtedly add to underlying inflation in the UK economy, although Wetherspoon, as always, will endeavour to keep price increases to a minimum,” chairman Tim Martin said in a statement.
However, customers continue to flock to the pub group, drawn by its low-price model as they try to rein in spending.
The company said it expects a “reasonable outcome” for its current financial year, though rising government-imposed costs, including energy, could affect performance.
Total sales in fiscal 2025 rose 4.5 per cent from the prior year to £2.13 billion (€2.5 billion), it said.
Before separately disclosed items, the company reported an adjusted pre-tax profit of £81.4 million for the year ended July 27th, compared with £73.9 million last year.
The group’s pubs in the Republic paid tax of €14 million during the year, of which €7.9 million related to VAT, €3.5 million alcohol duty, and €2.3 million employment taxes.
The company received £14,000 in local government support grants in the UK and the Republic associated with the Covid-19 pandemic, as well as £289,000 from the Irish State under the employee wage subsidy scheme.
The company has a potential deferred tax asset of £5.4 million, up from £4.1 million, relating to capital losses and tax losses in the Republic.
Mr Martin said the group would keep price increases to a “minimum”, after blaming a beefed-up packaging tax and rising energy bills for extra costs.
Mr Martin said the recently introduced “extended producer responsibility” levy on packaging will lead to the company’s costs from the tax tripling from £800,000 to £2.4 million a year.
