JD Wetherspoon Plc shares plummeted after the pub operator said the introduction of a national living wage would raise costs and jeopardize the industry’s financial outlook.
“Capricious initiatives by the government” will threaten the future of more British pubs, Tim Martin, chairman of the Watford, England-based company, said in a statement Wednesday. The shares fell as much as 7.3 percent to 715 pence in London, widening the year’s slump to 12.7 percent.
Martin said compulsory minimum pay, which U.K. Chancellor of the Exchequer George Osborne unveiled July 8, will hurt pubs more than it does supermarkets. The government’s announcement sent shares of retailers like Marks & Spencer Group Plc falling, and the regulation could also damp profit margins at bookmakers Ladbrokes Plc and William Hill Plc, analysts at Credit Suisse Group have said.
Starting in April 2016, U.K. companies will be required to pay staff a minimum of 7.20 pounds ($11.06) per hour, roughly 10 percent higher than the current requirement. The government expects the benchmark to rise to more than 9 pounds by 2020.
The pub company said it expects full-year operating margins of about 7.4 percent, compared with 7 percent in the most recent period. Profit before tax won’t exceed last year’s result, it also said.