Whitbread still on track despite crunch

Elizabeth Fournier
SO Whitbread has finally caught the high street bug. After quarter after quarter of soaring like-for-likes, growth has slowed, as squeezed consumer spending filters down to its Premier Inn and Costa brands.

It looks like the hotels have been hit hardest, with growth in revenue per room – a key measure of performance – all but disappearing in the run up to Christmas.

Add slowing sales growth at Costa, and you can see why investors started to sell as soon as the statement came out.

But let’s not get carried away – among the slew of high street failures Whitbread still stands head and shoulders above some of its competitors.

Though the hotel market in general is undoubtedly suffering, Premier is at the right end of the sector to pick up market share from more expensive brands.

And Costa’s performance over the last few years should have showed us consumers don’t give up their so-called small luxuries for long.

Add growth in the pubs business – which had been declining for the past two quarters – and Whitbread remains a pretty compelling case.

Chief executive Andy Harrison showed his faith in the company’s outlook by spending £200,000 on shares yesterday, and we think his confidence will pay off.

After a kneejerk reaction to the statement threw stock off by around four per cent yesterday, now would be a good time to invest.