Monday, 21 January, 2019

Whitbread warns tough United Kingdom trading conditions brewing

Whitbread says the coffee shop market in China is 'highly attractive' Image Whitbread bought Costa Coffee in 1995
Nellie Chapman | 19 January, 2018, 03:42

Meanwhile, the like-for-like sales grew 0.5 per cent at Premier Inn in the third quarter while Costa Coffee saw a fall in sales at its high street stores with comparable sales 0.1 per cent lower than in the same period in 2016.

Premier Inn UK sales were up 5.5% during the third quarter following Whitbread's investments in new hotels and extensions.

United Kingdom like-for-like (LFL) sales in the 13 weeks to 30 November rose 0.3%, compared to a 1.7% increase the same period a year earlier.

The retail market has come under pressure as consumers cut back on spending due to weak wage growth and rising inflation.

She added that the Costa high street stores in the United Kingdom are "highly profitable and generate strong returns", but weak retail market footfall is negatively impacting high street stores' like-for-like performance.

Signage for Premier Inn is seen on the outside of one of their hotels in London Britain
Image Whitbread also owns Premier Inn

"Internationally, Costa in China continues its good momentum with another quarter of positive like-for-like sales growth".

A significant programme of work is underway to improve the overall customer proposition, including new coffee product development, enhancements to the food offering and improvements in digital capabilities, which it claims has already offset some of the declines in high street footfall.

The US hedge fund disclosed a 3.4% stake in Whitbread in December, fuelling speculation of a push for a break-up.

Like-for-like sales at the Costa coffee chain appear to have been hit by falling footfall on the high street as parent Company Whitbread announces its trading performance this morning.

"Break up rumours could support the share price even in the face of weaker LFL sales growth".