Smoking ban worry for Wetherspoon's

PUB chain JD Wetherspoon has reported a fall in sales and warned that its no-smoking pubs had seen a fall in bar sales and a hit on profit margins.

The company, which has thrived on offering drinks at a discount to average industry prices, reported a 2% fall in third-quarter like-for-like sales - for the 13 weeks to 24 April - although it added that full year results, due in September, were expected to meet the City's forecasts.

Six new pubs - all with smoking bans - were opened in the period, taking the total for the year to 12. But only one will be opened in the next quarter, reflecting the slowdown in the company's break-neck expansion plans. Interested buyers have also been found for 16 underperforming sites.

The company has trailed a blaze on no smoking, pledging to enforce bans in all its 650 pubs by next year. The first batch of 11 pubs were converted earlier than planned in time for National Non-Smoking Day on 9 March.

'Although it is early days, trade at the new and converted pubs has been broadly in line withexpectations, although initial indications are that a dip in bar sales and an increase in food sales puts some pressure on margins.

'Given the forthcoming smoking ban in pubs, we will continue with our efforts to maximise sales and profits at these pubs.'

Last month, founder and chairman Tim Martin said the first non-smoking pubs in Exeter, Devon, and St Albans, Hertfordshire, had seen a rise in sales.

Third-quarter net operating margin fell 1% compared to the previous year. Overall sales for the quarter rose 2% to £202.9m. Last month, JD Wetherspoon reported a 20% drop in first-half profit, as a sector price war and higher utility bills hurt earnings.

Once the darling of the pubs and leisure sector, the chain has suffered from the downturn in consumer spending and tough competition in a saturated High Street drinks market.

Investors shrugged off the fall in sales and fears about the smoking ban. Wetherspoon shares were up 6¾p at 249¾p at 13.30.