Will Wetherspoon offer any cheer for investors after a tough year?

Pub chain JD Wetherspoon has already set the scene for lower-than-expected annual profits and results on Friday are likely to lay bare the impact of rising costs and disappointing sales growth on its bottom line.

The group alerted over profits in July after sales failed to match forecasts and saw the group miss out on the World Cup and warm weather boost enjoyed by many of its rivals.

The market is predicting full-year profits will plunge by more than a fifth after a disappointing year for the firm.

Wetherspoon – which runs 93 managed pubs and 23 franchise sites across the UK – said sales grew by 4% in the three months to July 19 after the much hoped-for summer bounce failed to materialise.

Founder and chairman Sir Tim Martin said the “marginally” slower-than-expected sales, when combined with soaring costs across the board, was set to see profits miss market forecasts.

He once more flagged “higher costs in the areas of food, labour, repairs, energy and business rates”.

Mr Martin’s warning added to a caution from the boss in May that Government-linked policy costs would drag on its financial performance.

It previously said it was facing £60 million of extra costs linked to wage increases and national insurance contributions for the year.

All this added together is set to see pre-tax profits tumble 21% to £64.6 million for the year to July 26 on revenues of around £2.2 billion, according to Hargreaves Lansdown.

Derren Nathan, head of equity analysis at Hargreaves Lansdown, said investors are already braced for a drop in 2025-26 profits, but added “the bigger question is what the current cost backdrop means for guidance”.

“With margins under pressure, markets will want reassurance that cash generation is strong enough to support future returns, including any dividend and buyback plans. Neither of which is guaranteed,” he added.

Richard Hunter, head of markets at interactive investor, said: “The group’s value model leaves it continually bumping up against a wall of higher costs, which puts perennial pressure on margins and profits.

“Investors are braced for what could prove to have been another challenging year.”