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Investing.com -- JD Wetherspoon (LON:JDW) shares fell more than 3% on Friday as the pub chain reported rising labor, energy, and packaging costs that are expected to weigh on profits, even after posting higher revenue and earnings for the year ended July 27.
Revenue rose 4.5% to £2.13 billion, in line with analyst expectations, up from £2.04 billion a year earlier.
Profit before tax, excluding separately disclosed items, increased to £81.4 million from £73.9 million, slightly ahead of consensus forecasts.
On a statutory basis, profit before tax rose to £89.3 million from £60.6 million in 2024. Operating profit before exceptional items stood at £146.4 million, about 5% above analyst projections.
Chairman Tim Martin said national insurance and labor rate increases would add about £20 million to annual costs, while non-commodity energy charges are expected to rise by £7 million.
A new extended packaging levy is projected to cost £2.4 million in the current year. Jefferies noted that these incremental cost pressures, along with potential consumer reaction to the UK Budget, may influence near-term results, though the shares are currently “effectively pricing in a c50% cut to EBITDA” relative to pre-COVID valuations.
Earnings per share before separately disclosed items rose to 50.8p from 48.6p, while after those items earnings were 60.0p, up from 40.5p.
The company kept its full-year dividend unchanged at 12.0p. Free cash inflow per share increased to 47.3p from 26.4p.
Like-for-like sales in the nine weeks to Sept. 28 rose 3.2%, compared with a 0.5% increase in the wider pub industry.
Jefferies’ comments highlighted category performance for FY25, with bar sales up 5.1%, food 5%, slot and fruit machine revenue 11.0%, and hotel room revenue down 11.9%.
At the year-end, Wetherspoon operated 794 pubs, down from 800 in 2024, after opening three pubs and disposing of nine.
Five franchised pubs were added, bringing the total to eight. Capital investment totaled £117 million, including £24.1 million on new pubs and £62.5 million on refurbishments.
Wetherspoon, its employees, and customers generated £837.6 million in UK taxes during the year, up from £780.2 million, including £411.2 million in value-added tax and £166.5 million in alcohol duty.
For the current financial year, Wetherspoon said it expects a “reasonable outcome,” noting that general economic factors, including energy costs, may affect results.
Jefferies said the outlook implies “limited changes to consensus expectations for FY26E,” with analysts forecasting revenue growth of 5%, operating profit growth of 1%, and profit before tax up 6%.