Whitbread suffers post-Christmas chill

Whitbread shares missed out on the FTSE 100 party yesterday after the brewing and leisure group warned that its profits margins had taken a hit over the Christmas period. Despite a 50.7 point rise in the index of leading shares, Whitbread shares fell 21.5p to 740p.

"The trading pattern was a slow pre-holiday period followed by a strong Christmas week although bad weather affected new year sales, especially in the South and East," Whitbread said.

One analyst said the fall was an over-reaction to a margin hit which probably only cost the company pounds 3m in lost profits, but he added that the warning had precipitated the first downgrade in profit forecasts at Whitbread in more than 18 months and would continue to affect sentiment.

Whitbread is understood to have taken on temporary staff in its food operations to cover the busy Christmas period and been hit by the effects of the recent cold snap which meant the increase in costs was not offset by a commensurate rise in sales. There had also been a shift to large 24 can multi-packs of beer which sell at a bigger discount.

According to analysts the move was an effort by Whitbread to force some brokers to rein in their expectations of about pounds 330m pre-tax profit for the year to February to a more realistic pounds 320m. The result will be the last before chief executive Peter Jarvis hands over the reins to David Thomas, currently the head of Whitbread's restaurants and leisure arm.

There was some surprise that reported strong trading in the Whitbread Inns managed pubs operation, and from Marriott Hotels, TravelInn and David Lloyd Leisure, had not been enough to offset such a small decline in margins.