Whitbread refreshed as Costa and Premier grow

Joseph Millis
WHITBREAD yesterday said it was confident of delivering full-year results in line with expectations, after posting another strong quarter of growth from its Premier Inn hotels and Costa Coffee, as both businesses continued to win market share.

In a statement, the group said its strong trading momentum from the first half continued into the third quarter, as total sales grew by 13.2 per cent year-on-year, and like-for-like sales rose six per cent, in the 13 weeks to 27 November.

It said that growth was driven by a 17 per cent increase in sales at Costa Coffee during the quarter, while those at its Premier Inn hotels rose 15.4 per cent, again driven by strong sales in and around London.

On a like-for-like basis, sales were up 5.2 per cent and 8.5 per cent, respectively.

“We remain confident of delivering full-year results in line with expectations, mindful that the fourth quarter last year was particularly strong, boosted by the absence of snow,” said chief executive Andy Harrison in the company’s statement.

“Our strong brands continue to win market share, reinforced by our ambitious organic network expansion,” added Harrison. The group said it remained on track to open around 4,500 new Premier Inn UK rooms and around 230 net new Costa stores worldwide this year. It said its committed UK room pipeline stood at around 12,400 new rooms, adding it had a number of “attractive” London freehold opportunities at various stages of negotiation.

“The successful com­pletion of these would result in our capital investment for the full year increasing to around £575m.

“These freehold properties replace leasehold opportunities, and exchange off balance sheet lease liabilities for on balance sheet debt.”

Panmure Gordon said: “Following today’s update we increase our 2015 and 2016 pre-tax profit estimates by around three per cent… We increase our target price to 4,582p from 4,046p and retain our ‘hold’ recommendation with the stock fairly valued in our view.”

Meanwhile, the firm also announced that hotels boss Patrick Dempsey was step­ping down in February after 10 years, to be replaced by head of restaurants Paul Flaum.

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