Wetherspoon Reports Strong Sales Growth but Warns of Lower Profits Amid Rising Costs

Wetherspoon trading update: sales momentum strong, but profits under pressure

J D Wetherspoon has posted a familiar mix for pubs right now: healthy sales growth, a cracking Christmas, and a clear warning that rising costs are biting into profits. Here’s my read on what’s moving the dial and what matters for the rest of the year.

Key numbers at a glance

Metric	Figure	Period/Notes
Like-for-like sales	+4.7%	25 weeks to 18 January 2026
Q2 like-for-like sales	+6.1%	Last 12 weeks of the period
Christmas LFL	+8.8%	15 Dec 2025 – 4 Jan 2026
Total sales growth	+5.3%	Year to date
LFL by category	Bar +6.9%, Food +1.3%, Machines +9.1%, Hotels -0.7%	25 weeks
Interest cost (ex IFRS 16)	c£47 million	FY26 expected (2025: £49 million)
Interest cost (incl IFRS 16)	c£60 million	FY26 expected
Debt at FY26 year-end	£740-£760 million	FY25: £724 million
Share buybacks	2,770,750 shares at £7.22	Year to date
Managed pubs	794	After six disposals and six openings YTD
Franchised pubs	16 total (8 opened YTD)	Another 10-15 expected this year

Sales momentum: the bar leads, Christmas delivers

Like-for-like (LFL) sales – that’s sales from pubs open at least a year, a better measure of underlying demand – rose 4.7% over 25 weeks, with a notable step-up to 6.1% in the last 12 weeks. The Christmas period was particularly strong at +8.8% LFL, which is exactly what investors want to see in peak trading.

The mix tells a story: bar sales up 6.9% outpaced food at 1.3%, with slot/fruit machines up 9.1%. Hotels slipped 0.7%. In plain terms, drink is carrying the growth, machines are a handy kicker, and food is growing more slowly. That mix can be margin-friendly if pricing and staffing hold up, but it also flags where customer demand is strongest right now.

Costs: a £45 million headwind hits first-half profits

The company is blunt on costs. Energy, wages, repairs and business rates have increased by £45 million in the first 25 weeks. Management says first-half profits are likely to be lower than last year, and if current sales momentum continues, full-year trading will be slightly below FY25.

This is the crux: Wetherspoon is growing the top line, but inflationary pressures – especially labour and utilities – are more than offsetting that. It’s not a demand problem; it’s a margin squeeze.

Financing and debt: manageable, but edging up

Interest costs excluding IFRS 16 notional interest are expected around £47 million for FY26 (2025: £49 million). Including IFRS 16, the total is about £60 million. For context, IFRS 16 notional interest reflects the accounting charge on lease liabilities – it’s non-cash, but it’s part of reported finance costs.

Debt is expected to end FY26 between £740 million and £760 million, up from £724 million in FY25. The company is also buying back shares – 2,770,750 so far at an average £7.22. That signals confidence in the long-term equity story, but in the short term it nudges leverage up while costs are elevated.

Estate growth: measured expansion plus a franchising push

Six new pubs have opened year to date, with a full-year target of 15. Six pubs have been sold, generating £3.3 million of cash, and the managed estate stands at 794. The company is also leaning into franchising: eight franchised pubs opened YTD, taking the total to 16, with another 10-15 expected this year, including a first mainland Spain site at Alicante Airport.

The strategy looks two-pronged: selective openings in high-traffic locations (London Bridge station, Paddington) and a capital-light franchising model that could broaden the footprint without loading the balance sheet as much. Alicante is an interesting brand test outside the UK and Ireland.

Guidance: slightly below FY25 if sales hold up

Management’s language is cautious. Despite better momentum in Q2, they’re flagging that first-half profits will be down year on year and the full-year outcome will be slightly below FY25 if current trends persist. No numerical profit guidance is provided.

In other words, the operational gears are turning – customers are still coming through the doors – but inflationary costs are running faster than the sales uplift. The near-term investment case hinges on how quickly that cost base normalises.

Why this matters for investors

• Demand is resilient: LFL growth, especially at Christmas, suggests the brand remains a go-to for value-conscious customers.
• Margin pressure is real: a £45 million cost increase in 25 weeks is significant. Even strong LFLs won’t fully offset that near term.
• Balance sheet watch: interest costs are stable-to-lower versus last year ex-IFRS 16, but year-end debt is guided higher at £740-£760 million.
• Capital allocation: buybacks at £7.22 average show confidence, but increase leverage while costs are elevated.
• Growth optionality: franchising could be a smart, capital-light route to expansion, with international proof points ahead.

Josh’s take: solid sales, cautious profits – execution now key

I’d call this update operationally positive, financially cautious. Sales trends are moving in the right direction, the Christmas print is strong, and the category mix suits Wetherspoon’s sweet spot. But the cost line is still in the driving seat, and that’s the reason profits are set to dip in H1 and full-year outcomes are guided slightly below FY25.

If you’re long-term, the franchise rollout and selective openings could add value without over-stretching the balance sheet. Near term, it’s a cost-control and pricing game. Any easing in energy or wage inflation would help the P&L considerably, but that’s not in management’s gift.

What I’m watching next

• Interim results on 20 March 2026 for detail on gross margin, labour as a percentage of sales and the run-rate of the £45 million cost headwind.
• Like-for-like momentum into late winter and spring, given Q2’s acceleration to +6.1%.
• Progress on the 15 planned openings and the 10-15 additional franchised sites, including the Alicante Airport launch.
• Full-year debt within the £740-£760 million range and any update on buyback cadence.

Bottom line

Wetherspoon is selling well, but paying more to do it. The business has the volume, value proposition and brand to navigate this, yet profits will reflect the cost reality in FY26. If inflationary pressures ease, the operational progress should start to flow through to earnings – until then, expect disciplined execution rather than fireworks.