Pressure of competition puts heat on Whitbread
Thursday 07 May 1998
In the year to the end of February, the group reported profits before tax and exceptional items of pounds 354.8m, up from pounds 316.5m. Brokers had forecast profits of between pounds 348m and pounds 360m.
However, the group's shares were off 2 per cent or 30p at 1,060p, while shares in its rival Bass fell 34p to 1082p.
Merrill Lynch analyst Philip Hawkins said: "We have put in a small downgrade for the first time in several years, in the region of 1 to 2 per cent. The period of upgrades for Whitbread has come to an end for the time being.
"It's mainly because returns at the tail end of the estate are under pressure, which is dragging down the overall number. It shows things are very competitive, especially in London."
Whitbread shares have outperformed the brewing sector by some 20 per cent over five years. There are mounting concerns in the investment community that the high levels of corporate expenditure on managed pubs has become harder to recover given the number of new and aggressive competitors coupled with the risk of a downturn in consumer spending.
Analysts estimate the industry spent pounds 800m to pounds 1bn last year on buying new sites or refurbishing existing pubs. It is estimated that more than half of this went into food pubs.
The group plans to spend about pounds 460m in the coming year, a similar amount to last year, with most of the investment concentrated on the group's managed pub estate. Whitbread's 1,700 managed pub estate includes Brewers Fayre and Hogshead.
The company said it would continue to shed pubs and off-licences that underperformed at a similar rate over the coming year. It sold some 500 outlets to realise pounds 144m in the year.
All of the group's divisions grew profits in the year. Beer improved trading profit 12 per cent to pounds 44.6m, although total sales were lower due to falling sales of cider, wine, spirits and flavoured alcoholic drinks. Its premium lager Stella Artois increased sales by 27 per cent.
Investment column, page 26
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Professional big game hunter Ian Gibson crushed to death by elephant during hunt
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
Migrants crossing the Mediterranean: Pope Francis joins calls for EU action on boat refugees
Yemen crisis: Meet the child soldiers recruited by the Shia Houthi rebels who have forsaken books for Kalashnikovs
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Isis in Afghanistan: Group claims responsibility for Jalalabad suicide bombing that killed 35
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...