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JD Wetherspoon has issued its fourth profit warning this year as it battles soaring costs caused by Labour’s tax raid.
Shares in the pub chain fell by as much as 9pc in the wake of Wednesday’s update, as Sir Tim Martin, the chairman, admitted that performance was “likely to be below market expectations”.
The pub group, which operates around 800 pubs and employs about 42,000 people, has repeatedly warned that the impact of high taxes and inflated energy costs were overwhelming resilient customer demand.
Sir Tim said: “Profits for the year are likely to be below market expectations, with marginally lower sales than anticipated in the final quarter, combined with higher costs in the areas of food, labour, repairs, energy and business rates.”
Like-for-like sales rose 4pc between May and July, an improvement on the previous three months.
However, analysts said the increase was underwhelming given the boost from warm weather and the World Cup.
Derren Nathan, of Hargreaves Lansdown, said heightened summer demand had failed to prevent another profit warning at JD Wetherspoon.
Sir Tim has repeatedly warned that Labour’s higher employment taxes and business rates were eroding profits across the hospitality sector, even as sales remained resilient.
Speaking on Wednesday, he urged Andy Burnham to cut VAT for pubs and reduce business rates.
“Lower business rates would help,” he said. “However, it’s chicken feed compared to the VAT disparity between supermarkets and pubs.
“Pubs pay 20pc VAT on food sales and supermarkets zero. This pushes up the price differential paid by customers.”
Sir Tim revealed in March that Wetherspoon’s profits had slumped after costs surged by £47m in six months, including an extra £28m on wages, £10m on repairs and £9m on business rates.
He also warned that increases to employers’ National Insurance contributions and labour costs would add about £60m a year to the company’s bill.
The latest warning comes after Andy Burnham repeatedly backed tax cuts for the sector before becoming Prime Minister.
Speaking at a Night Time Industries Association event last year, he praised lower VAT rates for hospitality used elsewhere in Europe “because of the social value that your businesses bring to places and towns that need that life injected into them”.
He also argued for lower property taxes on cafes, bars and restaurants to encourage businesses to fill empty high-street units.
Robyn Duffy, an analyst at consultants RSM UK, said Wetherspoon’s challenge was no longer getting customers through the door but making money from strong trading.
She said: “Management has been clear that higher labour and operating costs will continue to weigh on earnings, despite resilient sales.”
