Whitbread’s stellar growth may have slowed but the Premier Inn and Costa coffee operator’s new chief executive insisted yesterday that the long-term story was “not running out of road”.
Alison Brittain, who took over from Andy Harrison in December, said that the company’s performance should be looked at “through a longer lens than a quarter’s trading” and scoffed at suggestions that she had received a “hospital pass” from her predecessor.
“I came into the business in great spirits and looking forward to the challenge of both Costa and Premier Inn,” she said. “I think the challenge has got greater in recent months because of the external environment, confidence and competition, but it’s no less exciting to be in the job and I wouldn’t swap it for anything.”
In a full-year trading update, Whitbread reported a 1.7 per cent increase in like-for-like sales in the 11 weeks to February 11, well below the 3.6 per cent achieved in the first 39 weeks. However, total sales including new openings rose by 7.7 per cent and the company said that it remained on target to meet full-year expectations.
Comparable growth of Costa in the UK slowed to 0.5 per cent, the smallest increase since 2009, and Ms Brittain, former head of retail banking at Lloyds, admitted that like-for-likes had turned negative after “the warmest December in living memory” and lower footfall on the high street.
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Including new stores, Costa’s sales grew by 10.5 per cent. Ms Brittain said: “Total sales are also important, which is why we’re not panicking and throwing our hands up in despair.” She insisted that coffee culture was now ingrained in Britain while 90 per cent of planned store openings this year were in drive-thrus, retail parks and travel hubs, where there had been no slowdown.
The slowdown also infected Premier Inn, where like-for-like sales growth in the final quarter fell to 2.2 per cent, half the 4.4 per cent recorded for the full year.
Revenue per available room in London declined by 3.6 per cent and Ms Brittain conceded that there had been an “almost immediate” impact from the terrorist attacks in Paris, although she said that occupancy had remained “a massively high 86 per cent”.
The company plans to press ahead with capital investment of £700 million this year, while it is likely to complete a sale and leaseback of one or more of its freehold London hotels to raise at least £100 million.
Asked if a spin-off of Costa might be considered, Ms Brittain said: “At the moment we’re the best owners of Costa — we give it all the capital it needs to grow and deliver. It’s not constrained in any way. If that changed we would always have an open mind in terms of what’s best for the shareholder.”
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Mark Brumby, an analyst at Langton Capital, said: “ The numbers are by no means poor but the reality of the situation is that, in addition to the warmer weather derailing short-term numbers, the coffee market in the UK must be more mature than it was.”
Shares fell by 249p, or 6.2 per cent, to £38, down 28 per cent over 12 months.