Whitbread to step up Costa growth plans

 
Kasmira Jefford
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WHITBREAD unveiled ambitious expansion plans yesterday for its Premier Inn hotel and Costa Coffee chains, as strong sales at both helped push annual profit up 11.4 per cent.

The FTSE 100 firm said it would grow Premier Inn UK rooms by 45 per cent to 75,000 by 2018, and double total sales at Costa Coffee to £2bn, creating a further 12,000 jobs over the next five years.

The moved marks a significant leap from previous targets announced in April 2011 to double the number of rooms at Premier Inn to 65,000 by 2016 and also double Costa’s sales to £1.3bn.

Andy Harrison, chief executive, said: “This exciting organic growth opportunity, together with a clear focus on returns, will continue to create substantial shareholder value.”

Whitbread, which also runs the Beefeater and Brewers Fayre pub restaurant chains, reported an 11 per cent jump in full-year pre-tax profits to £356.5m compared with £320.1m last year and broadly in line with consensus forecasts.

Total group revenue increased 14.2 per cent to just over £2bn, with Premier Inn sales rising 13.1 per cent and Costa growing by 22.6 per cent to £1bn in the period.

But shares, which have risen 13 per cent in six months, fell more than two per cent to 2,555p on the news, despite its strong results.

Some analysts voiced concerns that Whitbread’s aggressive growth plans could mean lower returns for shareholders in the longer-term.