Alan Parker, the chief executive of Whitbread, pledged to turn around the leisure group's ailing business divisions within 12 months as he announced 250 job cuts at the company's head office.
Despite growing pressure from investors to sell off Whitbread's underperforming businesses, such as the David Lloyd health club chain, and its Pizza Hut and Beefeater restaurants, Mr Parker insisted yesterday there was no "for sale" sign aboveits divisions.
He said: "We are focused on improving our operating profits for the benefit of our shareholders. There is more value to be gained through Whitbread improving its performance."
Shares in the company fell 4.4 per cent to 921.5p, valuing the business at £2.3bn, as even news of a £400m share buy-back programme failed to cheer investors.
Whitbread also announced it would have to put £240m into its pension fund over the next five years to help plug the £373m deficit in the scheme. Analysts fear this will impact on free cash flow and may deter private-equity bidders.
Like-for-like sales across the group were up only 0.4 per cent over the six months to the start of September,
Mr Parker said the newly installed management at its David Lloyd chain and its pub restaurants division would have 12 months to kick-start performance.
Like-for-like sales at its pub restaurants, which operates the Beefeater and Brewers Fayre chains, were down 1.2 per cent and profits slumped 11 per cent.
Whitbread is in the process of rebranding its Brewsters family pub chain to Brewers Fayre and is also revamping its Beefeater estate.
At David Lloyd, profits slumped 13.5 per cent to £21m. Esporta, a rival health-club business owned by Duke Street Capital, is known to be interested in buying David Lloyd, and has appointed Citigroup to advise it on a deal.
Nigel Parson, a research analyst at Williams de Broë, said: "Esporta has intimated that it would like to acquire David Lloyd. Whitbread should take the opportunity."
Whitbread's high street outlets, which include Pizza Hut and TGI Friday's, are also suffering from the squeeze on consumer spending.
Trading in its London venues slowed sharply as a result of the terrorist bombings in the summer, and profits for the six months were down 13 per cent to £7m. Only its Costa Coffee chain has performed well, enjoying positive sales growth.
The only other bright spot in the group is its budget hotels division, Premier Travel Inn. Like-for-like sales were up 7.7 per cent and profits in the division were up 48 per cent to £71m.
The performance of Premier Travel Inn helped swing profits before tax at the group up 11 per cent to £102m. The 250 redundancies will come from the head office, based in Luton, in the hope of saving about £25m a year.Reuse content