Whitbread in sales setback from Premier

WHITBREAD yesterday reported slowing sales growth at its Premier Inn chain and warned over tough times for consumers.

The group, which also owns Britain’s biggest coffee shop chain Costa, reported sales growth of 5.1 per cent at Premier Inn hotels open for more than a year in the quarter to 17 February, a slowdown from the 8.7 per cent rise in the previous quarter.

Like-for-like sales at Costa Coffee were up three per cent, below analysts’ expectations of around seven per cent.

Whitbread has been a consistently strong performer throughout the economic downturn while some competitors in the leisure sector have struggled, particularly under the burden of debt.

Chief executive Andy Harrison, who joined the group last year having previously been chief executive of Easyjet, said: “The rise in VAT is pretty new. The rising oil price is beginning to feed through to the forecourt.

“From a consumer perspective there’s more negative than positive news.”

However he added: “On the whole we are very pleased with our figures, we were up against very tough comparatives. “

As well as posting quarterly results the company also announced that it had bought self service coffee machine company Coffee Nation in a £59.5m deal. The company will be re-branded as Costa Express with new machines to be installed in up to 5,000 petrol stations, hospitals and other sites acrosss the UK over the next three years. Harrison said customers’ desire for a quick cup of quality coffee on the move would ensure the Costa Express brand would flourish.

Morgan Stanley analyst Jamie Rollo said: “Whitbread has reported an in-line quarter for this trading update, with slower sales growth in hotels (as expected) and at Costa, but a strong restaurants performance and an attractive acquisition.

“Whitbread is one of the fastest-growing, property-rich and yet cheapest hotel stocks.”