Cautious JD Wetherspoon curbs new pub plans

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By Marc Jones

LONDON (Reuters) - JD Wetherspoon said on Tuesday it was cautious about the next six months but it was seeing little sign of pubgoers staying at home to save money while the smoking ban had thrown up few surprises.

Wetherspoon, which has almost 700 pubs in the UK, said growing food, cask ale and coffee sales were failing to counter a drop in demand for strong lager and spirits, with like for-like sales down 3.2 percent in the 11 weeks to Jan 13.

The slide accelerated from a 1 percent drop reported for the 13 weeks to October 28.

"Sales have come off a bit from the first quarter but overall we remain quite optimistic," Chief Executive John Hutson told Reuters.

"Seven months into the smoking ban we don’t think that’s too bad and it’s well within the realms of what we thought would happen."

Wetherspoon shares, which along with its rivals have slumped 65 percent over the last seven months, fell 7 percent in early trading as analysts digested the latest downbeat update from a pub firm.

"After weaker updates from elsewhere in the sector, this performance does not come as a surprise to us," said Investec analyst Matthew Gerard.

"Despite its low price point, the impact of the post smoking ban rebound could be offset by the general consumer slowdown," he .....continued below

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The stock’s losses reversed after midday and stood 4 percent higher by 2:30 p.m. helped by a surprise three quarters of a percentage point emergency interest rate cut by the U.S. Federal Reserve.

Other shares in the sector were up between 2 and 4 percent as traders bet the Bank of England would following suit and cheer mortgage paying Britons.

SECTOR HANGOVER

In its English pubs where it banned smoking well before the July law was introduced, like-for-like sales were around 6 percent higher, Hutson said, adding that January trading had not deteriorated despite rivals’ bleak outlook.

"In our case the January trend is the same as the period as a whole," he said.

Pub firm shares <.FTASX5750> have been hit hard as the industry struggles to cope with consumer spending worries, a smoking ban imposed in 2007 and the usual post-Christmas hangover.

Last week larger rival Punch’s shares fell to a three-year low after it reported falling sales and issued a wary outlook. Enterprise Inns also said it expected subdued spending by drinkers.

Hutson said margins had improved over the last month as energy and repair costs eased although the firm had pulled back on its expansion plan.

It now hopes to have 25 new pubs open by July, down from the 30 it had planned.

Analysts on average expect Wetherspoon to post a year pretax profit of 62.4 million pounds, according to a Reuters Estimates poll of 19 investment banks.

(Reporting by Marc Jones; editing by Sue Thomas/Elaine Hardcastle)