Whitbread sets sights on expansion following strong First Half Sales

Posted on 21 October, 2014 by Kirsten Kennedy

Whitbread has slowly transformed itself into one of the leisure sector’s strongest competitors. In part, this is due to its commitment to investing in its subsidiary chains, with consumer demand for both Costa Coffee and Premier Inn pushing up the group’s first half sales in, what is becoming, an increasingly familiar story.

Whitbread-sets-sights-on-expansion-following-stromg-First-Half-Sales

At Costa Coffee, like for like first half sales grew by 6 per cent, yet Premier Inn outstripped this with a like for like sales jump of 9.6 per cent. According to Numis analyst Wyn Ellis this is good news for the group as Premier Inn currently generates around 70 per cent of Whitbread’s profits.

Whitbread recorded an overall pre-tax profit increase of 18.5 per cent in the six months to the 28th of August, equating to an impressive sum of £256 million. Group like for like sales climbed by 7 per cent, bringing first half year revenues up by 13 per cent to £1.23 billion.

As a result, it has gained the confidence to raise its interim dividend by 15.6 per cent to 25.2 pence yet will also continue to invest into growth for its two strongest brands. Chief executive Andy Harrison confirmed that the first half performance would allow Whitbread to launch its first Premier Inn in mainland Europe, thus intensifying the group’s drive for international expansion.

He said; “This financial year we expect to invest around £500 million in driving our organic growth and further improving the quality and consistency of our customer experience.

“We expect to open around 4,500 new Premier Inn UK rooms and around 230 net new Costa stores worldwide.

“This keeps us on track to achieve our ambitious growth milestones.”

Premier Inn’s first mainland European hotel will open shortly in Frankfurt, as Whitbread recently acquired the freehold for a 200 bedroom hotel in the German city. Whitbread will also seek to expand its low cost hotel brand to Southeast Asia in the coming 12 months, with popular holiday resort Bali high up on its list.

Whitbread has seen a strong reception for the hotel brand in existing international markets. It currently operates three hotels in India and five hotels in the Middle East – areas which, presumably, will also be scrutinised for potential expansion options as part of the large scale investment into growth.

Costa, meanwhile, will expand its UK footprint from the current 1,755 stores to more than 2,200, with last year’s 177 new openings putting the group well on track to meeting this target. Like Premier Inn, it will also be looking to expand abroad, with the eight existing stores in Paris forming a strong base from which to open a further ten outlets in France by February 2015.

In total, Whitbread expects to create more than 10,000 new jobs in the UK and abroad during the next three years, with the UK jobs market set to benefit hugely.




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