JD Wetherspoon chairman attacks Scotland debate ‘scaremongering’
We’ll send you a myFT Daily Digest email rounding up the latest Retail & Consumer industry news every morning.
Business leaders are “talking nonsense” and scaremongering by trying to persuade Scots to remain part of the UK by warning that prices will rise if they vote for independence, the head of a leading pub group said on Friday.
Tim Martin, the chairman of JD Wetherspoon, which has 70 pubs and 3,000 employees in Scotland, said politicians and business leaders were “underestimating the intelligence of voters”.
“If you want Scots to remain in the UK, you’ve got to use reasonable arguments,” he told the FT. “For example, you just need to open a couple of hundred Aldis and then prices will come down.”
Mr Martin, who is from New Zealand and said he was not taking sides in the independence campaign, was referring to comments on Thursday by Sir Charlie Mayfield, the chairman of the John Lewis partnership, who said prices could rise after independence.
The JD Wetherspoon boss said: “There’s no reason why Scotland shouldn’t thrive as an independent country if that’s what the Scots want. “It will entirely depend on the policies an independent government will follow. If they’re sensible, they will thrive; if they’re foolish, they won’t.”
Mr Martin also said Scots should not put too much faith in Alex Salmond, Scotland’s first minister and head of the Yes campaign, remaining in office for that long. “Remember [Mikhail] Gorbachev didn’t last long in Russia [after Glasnost], and he was a good guy.”
He was speaking after the pubs group released its preliminary results for the year to the end of July, which showed it had defied the trend of closing premises in the UK pub industry and a poor summer to record slightly better results.
The group recorded an adjusted pre-tax profit of £79.4m, up 3.1 per cent on the previous year, and an operating margin of 8.2 per cent, at the upper end of analysts’ expectations. It opened 46 pubs during the year while selling or closing five.
It now has 927 properties, with the average development price rising from £1.64m compared with £1.55m as it spends more on kitchens, customer areas and beer gardens.
The strategy is showing some success as it defies an industry that has seen more than 10,000 pubs close across the country since 2002.
It forecast a “reasonable” outcome in the current financial year. This year it predicted its operating margin would drop to 7.7 to 8.1 per cent for the 2014/15 trading year.
Like-for-like sales for the first six weeks of the new trading year, to September 7, increased 6.3 per cent, with total sales increasing 11.4 per cent.
The share price was up 3 per cent in early morning trading on Friday at 765p, slightly outperforming the FTSE 100.
Mr Martin welcomed the results but said he would continue to campaign for pubs to pay the same VAT rate as supermarkets. While supermarkets pay the same VAT on drinks as pubs, they pay no VAT on food and, according to Mr Martin, cheaper business rates per pint of beer served.
“Wetherspoon, along with many pub and restaurant companies, is supporting Jacques Borel’s VAT Club on Tax Equality Day to publicise this inequality,” he said, referring to a day of action on September 24. “A number of MPs have signed up for our cause, and most people seem to say it makes no sense for supermarkets to pay less tax on food than pubs.
“A similar danger relates to the general tone of corporate governance advice and practice which has helped to create unstable board rooms, often preoccupied by the wrong considerations. For example, many do not even recognise the danger from the VAT disparity, despite the high weekly level of pub closures which has lasted for many years.”
For the full year to the end of July, like-for-like sales were up 5.5 per cent, operating profit was £115.6m, up 3.8 per cent, and earnings per share was 47p, up 4.9 per cent.
Get alerts on Retail & Consumer industry when a new story is published