Whitbread plans Costa Coffee and Premier Inn expansion as Profits surge

Posted on 26 February, 2015 by Kirsten Kennedy

The Whitbread Group has become a dominant force in the UK’s retail and leisure markets, with its Costa Coffee and Premier Inn chains managing to grow their customer bases at a strong pace. This has allowed the group to express a confidence that full year profits will be at the top end of analysts’ expectations when results are released in a few weeks’ time.

Whitbread-plans-Costa-Coffee-and-Premier-Inn-expansion-as-Profits-surge

During the fourth quarter of the group’s financial year, it achieved a 5.8 per cent in underlying sales thanks to a strong boost in demand for both its Costa Coffee and Premier Inn divisions. Furthermore, in the 11 weeks to the 12th of February, like for like sales climbed by 8.6 per cent at Premier Inn and by 6.9 per cent at Costa Coffee, indicating that the current growth strategy at both chains is truly beginning to pay off.

Analysts believe that full year profits will amount to between £437 million and £495 million, with Reuters data indicating that the average consensus fell around the £472 million mark before fourth quarter results were released. However, this could now have risen to around £490 million, and the group may even surmount previous expectations given the strong results of expansion within the subsidiary chains.

Whitbread chief executive Andy Harrison believes that part of the group’s success can be attributed to the rapid improvements seen within the regional hotels market.

He says; “We have continued our strong trading momentum in the final quarter, with total sales growth of 14.3 per cent and like for like sales growth of 5.8 per cent.

“Premier Inn and Costa Coffee continue to grow rapidly, winning UK market share, with Premier Inn also benefitting from the recovery in the UK regional hotel market.

“With this strong performance we expect to deliver full year results towards the top end of current expectations.”

The improvements in consumer confidence, and low inflation levels boosting consumer spending power, have been capitalised upon fully by Whitbread which has implemented a programme of rapid growth at both Premier Inn and Costa Coffee. This has meant the group has been well placed to benefit from growth in the average hotel room rate and occupancy levels, which accountants at BDO revealed rose by 7.9 per cent to £55.81 and by 4.5 per cent to 59.7 per cent respectively during January.

According to Mr Harrison, the group will continue to seek growth opportunities in the coming financial year.

He concludes; “We are investing to improve our customer propositions even further and in our ambitious organic network expansion.

“This year we shall open close to 4,500 new UK rooms and around 230 net new Costa Coffee stores worldwide, with a further circa 5,500 new UK rooms and circa 250 net new Costa Coffee stores worldwide planned for the next financial year.”




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