Whitbread plans further Expansion following Strong First Quarter performance

Posted on 17 June, 2015 by Kirsten Kennedy

While many leisure sector companies are still very much focusing upon brushing themselves off after taking a hit during the recession, the dominant Whitbread group continues to impress market analysts, this time with a hugely strong start to the year.

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The Costa Coffee and Premier Inn owner has this week revealed its first quarter results, which show a 4.3 per cent sales rise during the 13 weeks to the 28th of May 2015.

According to the trading update, Premier Inn was once again the stand-out performer for the group, with like for like sales rising by 6.3 per cent during the period. In terms of total sales, this equated to a highly impressive 14.3 per cent sales leap, indicating that Whitbread’s current tactic of rapid expansion throughout the UK is certainly bearing fruit.

However, only a hair’s breadth behind in terms of success was Costa Coffee, which noted a 5 per cent rise in like for like sales and a mammoth 17.2 per cent jump in total sales during the first quarter. This allowed total sales growth for the group during the period to reach 12.5 per cent – one of the group’s best quarterly performances since before the financial crisis hit in 2008.

A large part of Whitbread’s success in recent months has been due to the implementation of a programme which, contrary to the plans of rival brands, has focused upon rapid expansion rather than a more cautious approach given the uncertain economic situation.

During the first quarter, for example, Premier Inn increased the number of rooms available in the UK by 8.2 per cent and in London alone by 23.2 per cent to take advantage of a more favourable tourism industry within the capital.

This strategy clearly paid off, as in London occupancy figures remained high at 86.2 per cent – a figure expected to climb as summer progresses. Yet the regions managed to hold their own too, reaching an occupancy figure of 79.7 per cent and therefore giving an overall occupancy rate of 80.6 per cent in the UK as a whole.

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Chief executive Andy Harrison says; “Whitbread has begun the new financial year well, in line with expectations, with total sales growth for the first quarter of 12.5 per cent and good like for like sales growth of 4.3 per cent, driven by continued momentum in Premier Inn and Costa.

“Our leading brands continue to win market share as we invest in our people, our customer experience and our infrastructure – we are on track to deliver our ambitious growth milestones.

“This year we plan to open around 5,500 new Premier Inn UK rooms*4 and around 250 net new Costa stores worldwide.”

The group also took the opportunity to reveal the imminent retirement of Mr Harrison, who will be replaced by head of Lloyds’ retail bank Alison Brittain in December.

Chairman Richard Baker says; “I am pleased to confirm that Alison Brittain will now be joining Whitbread as Chief Executive Designate on 28 September.

“Alison will start as Chief Executive on 7 December enabling a smooth transition with Andy Harrison who will be retiring from the Company on that date.”




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