Whitbread’s performance stirred by Costa

Whitbread is looking to the future with confidence, despite announcing a group like-for-like sales fall of 2.7% for the 6 months to the end of August. The ‘outstanding performance’ of Costa Coffee has helped to invigorate the company’s outlook.

Whitbread says that it is ready for expansion when the time is right. Referring to its Premier Inn budget hotel brand, the group said that it has 10,000 rooms in the pipeline and has already announced new airport hotels. In the difficult economic environment Whitbread put a lot of effort in to keeping a robust balance sheet. The group said that it is maintaining its target of £25 million in structural cost savings by the end of 2010/11.

In terms of its trading, the most encouraging aspect was Costa. The coffee chain now contributes 22% to group sales, which Whitbread attributes to the quality of its brews, coupled with staff training. Hotels & Restaurants had a tougher time with like-for-like sales down 3.6%, although Whitbread does note that it has been continuing to attract more business customers and it has opened new hotels in Asia, in addition to an increased number of rooms in the UK. Like-for-like sales actually increased in regard to its pub-restaurants by 1.8%, following a focus on value for money and refreshed menus.

Whitbread says that it assumes that difficult economic conditions will continue but that, in the 9 weeks since its statement-deadline, it has seen robust momentum with Costa, in particular, continuing to trade strongly.

Meanwhile, Punch Pub Company also announced results which reflected the difficult economic conditions. The UK pub giant said that its pre-tax profits for the year to 22nd August fell from £262.3 million to £160.4 million. Punch ascribed its difficult year to a combination of weaker beer sales, lower rental income and higher levels of support for licensees. The group says that it is planning investment and is confident of longer-term prospects but said that in the shorter term, there is ‘a lack of visibility on trading outlook’.

15 October 2009