Hotel chain saw sales rise twice as fast as the comparative period last year, thanks to resilient market and 9000 new rooms
Companies: Whitbread PLC
Strong performance by Premier Inn helped Whitbread Group total sales grow 7.6% in the first Quarter of the year despite falling consumer confidence slowing growth at its Costa Coffee chain.
Sales at the hotel chain rose twice as fast as the comparative period last year, with the firm enjoying the benefits of the 9,000 rooms it has opened during the last two years. Premier Inn sales rose 9.2% during the period compared to the 2.1% in Q116, and occupancy levels also increased marginally.
The bumper results offset more challenging times for Costa Coffee, which saw like-for-like sales rise just over 1%, considerably slower than last year's 2.6%. Costa has faced challenges from falling consumer confidence and a growing demand from the public for more upmarket alternatives.
Panmure Gordon reiterated its HOLD rating on the stock, saying the update was encouraging, with positive Costa LFL sales and "robust" Premier Inn offering some "relief":
"FY18 consensus looks appropriately conservative, with no change expected at this early stage of the year. At c.10x FY18 EBITDA the valuation feels well poised, with upside from Costa initiatives likely to be capped by challenging UK consumer/high street dynamics. HOLD."
CEO Alison Brittain said it had been a good start to the year, adding that the board had a clear plan to deliver growth in its existing estate and was on track to open more than 4,000 hotel rooms and 250 Costa Coffee shops during the year:
"We have had a good start to the year, with first-quarter sales growth of 7.6%, in line with our expectations. Our continued drive to grow and innovate in our core UK businesses, focus on our strengths internationally and build capabilities to support long-term growth, combined with our ongoing cost efficiency programme, gives us confidence that we will make further good progress this year."
Speaking about Premier Inn, she said it was winning market share and benefitting from a "resilient" hotel market.
"Our digital development team continued to innovate for our customers, and we launched our personalised business to business booking platform that helped to maintain our direct bookings at 94% of sales. We were pleased that total UK occupancy was up compared to the first quarter last year at 79.2%, at the same time as we increased our capacity."
Whitbread shares rose 4.5% shortly after opening on Wednesday.
