British pubs group JD Wetherspoon posted a 2.7 percent fall in first-half profit as higher costs and falling margins dampened rising sales of its value-led deals.
The firm, which has over 800 pubs in Britain, said on Friday pretax profit for the 26 weeks to Jan. 27 was 34.8 million pounds ($52.38 million), down from 35.8 million pounds a year ago. Revenue rose 10 percent to 626.4 million pounds, with underlying sales up 6.9 percent.
Higher costs in areas such as tax and food pushed its margin down 1 percent year-on-year to 8.3 percent for the first-half, reducing the impact of rising sales brought on by cash-strapped customers choosing its value-led offers over more expensive competitors.
"It's not great to put our like-for-like sales up by 7 percent and to have no profit growth to show from it, it does make me want to cry into my beer," Wetherspoon chairman Tim Martin told Reuters, adding that he hoped improved products and the look of his pubs would ultimately help to grow profit.
The firm said it expected tax and input costs to continue to rise, but that the firm was aiming for "a reasonable outcome" for the full-year. Like-for-like sales were up 7.3 percent in the six weeks to March 10.
The group has long called for tax parity between pubs and supermarkets, who pay virtually no value added tax on food, allowing them to sell alcohol at much cheaper prices.
Rather than introduce a minimum pricing legislation on alcohol, an idea being considered in Britain, the company said tax parity between pubs and supermarkets would lead to a rise in the average price paid on alcohol, and help the government to meet health objectives.
Shares in Wetherspoon, which said it now expects to open 30 pubs this financial year, closed at 510 pence on Thursday, up 20 percent on a year ago, valuing the firm at around 640 million pounds.
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