Whitbread shares edge higher on strong first half results

 

Shares in Whitbread, the owner of Costa Coffe and Premier Inn, topped the FTSE 100 as the company reported strong sales in the first half.

Costa sales rose a staggering 15.9 per cent in the three months to end-May with sales from outlets open at least 12 months up by 4.5 per cent as chief executive Andy Harrison vowed to keep prices unchanged.

"We have bought all our coffee for the financial year to next March," he said. "So we have no plan to raise our prices. And we are still the best value with a Costa coffee at £2.45 against the same size in Starbucks at £2.60 and in Caffè Nero £2.70."

Harrison pointed out: "That is against 8 per cent in the same quarter a year earlier when the weather was really cold. If that’s a slowdown it’s one I’m more than happy to see."

Costa’s growth was stronger than analysts’ forecasts of 4 per cent but it was Premier Inn which bust the forecasts with 9.5 per cent like-for-like growth against market predictions of 6.8 per cent.

Harrison said: “This was driven by continuing strong growth in London and clearer signs of economic recovery in the UK regions, where revenues per room were 9.9 per cent ahead.

“Around half our Premier guests are business-to-business people and are a very good indicator of the economic recovery moving across the country.”

In the capital Whitbread has a dozen new Premier Inns and eight of its new-concept high-tech Hub by Premier Inns in the pipeline. It has acquired three new freehold sites at Farringdon, St Swithin’s Lane and Quaker Street in Shoreditch to build Hub hotels.

In the restaurants business, which includes Beefeater and Brewers Fayre, like-for-like sales rose by 4.4 per cent while covers were up by 2.6 per cent.

Whitbread shares rose 156.5p, or 3.7 per cent, to 4324.5p. They have risen by 13 per cent this year. Analysts upgraded their forecasts today and Barclays has a price target of 4750p. Today’s annual meeting was the last for outgoing chairman Anthony Habgood.

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