Increased competition, rising costs and scare stories over binge drinking have all conspired to wipe 16% off pre-tax profits at pub operator JD Wetherspoon.

The group, which now has 655 pubs and inns, saw pre-tax profits drop to £38.7m in the 12 months to 24 July, down from £46.3m the previous year. 

Sales grew by 3% to £809.9m, up from £787m before. Although average sales per pub increased by 1%, like-for-like sales were down by 0.6%.  Like-for-like sales have continued to fall in August by 1.7%.

The group, which has reined back its expansion programme, opened 13 pubs during the financial year (compared with 28 the year before) and closed one venue. 

Chairman Tim Martin said the group faced increased labour, utility and repair costs and growing competition from supermarkets, the off-trade and duty-free imports from the Continent. 

He blamed the press blitz on problem drinking for a decline in customers to town and city pub. Wetherspoon's response has been to promote food, soft drinks and coffee and to ban 2-for-1 drink offers and the discounting of double measures of spirits.

The group’s move towards non-smoking pubs has cut turnover at the converted outlets by 7%. Lower-margin food sales have risen in these venues, but have failed to offset the decline in liquor sales. Wetherspoon's plans to have 50 non-smoking pubs by Christmas.

The group expects its new licence applications to allow its English pubs to open one hour later on weekdays, and between one to two hours later on Fridays and Saturdays, as they already do in Northern Ireland and Scotland.

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