SHARES in JD Wetherspoon tumbled this morning after the pub chain warned that rising labour costs were likely to hit its full year profits.
Tim Martin, the pub group’s outspoken chairman, used a first-quarter trading update to warn that increased labour costs “may result in our annual profits being slightly lower than the last financial year”.
The warning sent Wetherspoon’s shares down 35p or 4.5% to 741p.
Operating margin in the 13 weeks to 25 October 2015 fell to 6.2% from 7.7% due to increases in the rates for hourly paid staff, which totalled 13%.
“Many will be caught by surprise by the [margin] decline …. The direction may have been expected, but the quantum of the decline will surprise many,” Nick Batram at Peel Hunt told the Guardian.
“There will be more pain to come in April with further wage increases (albeit smaller ones) and, with the ever-increasing competitive market backdrop, there is more downside risk to numbers.”
Martin has been a vocal opponent of the National Living Wage, set to be introduced from April, whereby staff over 25 must be paid at least £7.20 an hour, rising to £9 by 2020.