Chairman Tim Martin says rising costs and weaker-than-expected sales will hit annual profits
JD Wetherspoon shares fell 10 per cent on Wednesday after the pub chain issued its fourth profit warning in seven months.
Chairman Tim Martin warned annual profits would fall short of market expectations when the company reports its full-year results in October.
He 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."
The latest warning marks the fourth time this year Wetherspoon has downgraded its outlook as rising costs and weaker-than-expected trading continue to weigh on performance.
Like-for-like sales increased by four per cent during the 12 weeks to July 19, according to a trading update released on Wednesday.
The company said sales growth in the final quarter was lower than expected.
This year's World Cup, which has traditionally boosted trade for pubs, provided less support than in previous tournaments because matches were played later in the day due to the competition being hosted in North America.
Richard Hunter, head of markets at Interactive Investor, said other pub operators had reported stronger trading during the tournament and warmer weather.
He said: "While others in the sector have been hailing a boost to sales from the impact of the World Cup and generally warm weather, Spoons has apparently not joined the party."
Increases to the National Minimum Wage and business rates, which came into effect in April, have added to costs for hospitality businesses.
Wetherspoon also cited higher food, energy and repair costs as factors affecting profits.
That is lower than previous guidance of between £740million and £760million and is in line with the level reported at the end of the previous financial year.
Mr Hunter said Wetherspoon had previously demonstrated an ability to recover from challenging trading conditions.
However, he said the business continued to face longer-term issues alongside the current pressures.
These include concerns repeatedly raised by Mr Martin over differences in alcohol taxation between pubs and supermarkets, as well as business rates.
Mr Hunter said: "Wetherspoon's dogged determination to fight its corner has won the brand many friends, but from an investment perspective the jury remains out on prospects."
