Pub chain JD Wetherspoon said today its full-year profits may fall below market estimates after higher energy costs and wage-related taxes dragged first-half profit down by 37%.
Shares of the FTSE mid-cap company fell over 9% in early trading.
The impact of the US-Israeli war on Iran on energy prices, with knock-on effects on consumer spending, adds to the challenges the hospitality sector already faces.
While the UK government's support package to ease property tax burdens offers some relief, the group said increases in national insurance and labour rates are expected to add about £60m a year to costs.
Higher energy prices will add around £7m, it added.
"These cost increases will undoubtedly add to underlying inflation in the UK economy, although Wetherspoon, as always, will endeavour to keep price increases to a minimum," Chairman Tim Martin said in a statement.
In the seven weeks to March 15, Wetherspoon's like‑for‑like sales grew 2.6%, easing from 5% growth in the same period last year and from 4.8% growth in the six months to January 25.
Consumer spending in Britain has slowed as householders grow more pessimistic about the stagnant economic outlook.
Bank of England policymakers yesterday voted to keep borrowing costs on hold given inflation risks linked to the conflict and some officials signalled that interest rates could still rise.
Analysts expect Wetherspoon to report a pre-tax profit of £81.06m for the year to July, according to LSEG data.
The company posted an adjusted pre-tax profit of £26m for the first half, compared with £41.3m a year earlier.
