Whitbread growth loses its froth in the economic chill

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The Independent Online

Whitbread shares tumbled 4 per cent yesterday as the hotels, pubs and coffee combine caught the chill from turbulent economic winds.

While the FTSE 100 giant is still growing, signs that it is slowing down unnerved investors somewhat. Its figures came as Carpetright and Wickes DIY stores reported they too felt the chill of the economic downturn.

Whitbread, the company behind Costa Coffee, Premier Inn and Beefeater, was one of the winners during the recession as people sought affordable treats and cheap hotel rooms.

That even it is not immune to the financial squeeze is concerning to some City analysts. In the 13 weeks to December 1, like-for-like sales were up 2.4 per cent against a 3 per cent rise across the last three quarters. Costa is still enjoying healthy sales increases – 3.8 per cent on a like-for-like basis and an impressive 25.2 per cent overall.

The statement to the stock market noted: "Trading month by month continues to be variable in a challenging consumer environment. Within the total hotel market, industry data shows that revpar growth in London and the provinces has virtually disappeared."

That revpar – revenue per available room – is moribund in the capital came as a surprise. So far, Premier Inn is resisting that trend, winning market share. How much longer it will be able to do so is an open question, say analysts.

All of which suggests the honeymoon enjoyed by chief executive Andy Harrison, who succeeded Alan Parker, could be over. "These are good numbers," he insisted today. "There aren't many people doing that at the moment."

Whitbread still remains in a far stronger position than Carpetright, where founder Lord Harris of Peckham was out of pocket to the tune of £1.75 million after the business had to scrap the half-year dividend. The chairman owns nearly 22 million shares in Carpetright, which managed an 8p divi this time last year.

Falling sales and a loss before tax of £800,000 for the 26 weeks to 29 October mean there is no divi. The loss compares with a £9.8 million profit a year ago. Sales are down 3.9 per cent to £238 million and margins have slumped 4.3 per cent.