The chief executive of Whitbread has said he will step down from the leisure group next February as the group announced an 18.5 per cent rise in pre-tax profits to £488.1m at its final results, but said a demerger of coffee chain Costa was “not on the agenda”.
“I am 58 in two days’ time. I have been a chief executive of three public companies for 18 years. It is time to do something a little bit less demanding,” said Andy Harrison, who has headed Whitbread since September 2010 after joining from easyJet.
Stating that he would be retiring from “a full-time executive role” he said he would retain his chairmanship of Dunelm, the home furnishing company that he joined last July.
He made the announcement as Whitbread announced a 13.7 per cent rise in full-year revenues to £2.6bn, with strong growth at both Costa Coffee and hotel chain Premier Inn, and a 19.4 per cent rise in the full-year dividend to 82.15p. The company’s share price rose 1.97 per cent in early trading to £54.40.
Costa Coffee saw its sales rise by 17.9 per cent and its operating profit rise by 20.7 per cent. The company is Britain’s biggest coffee shop chain and sold 464m cups last year.
But Mr Harrison said that speculation that Whitbread would demerge Costa was misplaced. “That is definitely not on the agenda,” he said. “Whitbread has had a very clear, consistent strategy for the past five years. We have laid out new five-year milestones.
“Costa has grown its profits by 21 per cent. Whitbread wants to grow [Costa’s profits] by 80 per cent over the next five years. We have created a huge amount of value. The company has got a very strong brand, a strong management team. It is performing really well. Why would you change anything?”
He added that Costa was flourishing within Whitbread because of the company-wide approach to customer service. “The culture spans Premier Inn and Whitbread and is an important factor behind the growth in our like-for-like sales,” he said.
Over the next five years, Whitbread said it would increase the number of Premier Inn rooms from 59,138 to 85,000 and hoped to boost Costa’s sales from £1.4bn to £2.5bn. Mr Harrison said there would be no deviation in Whitbread’s strategy, despite his departure.
“We are focused on delivering these milestones. We are investing a lot. In the new financial year there will be £700m of organic investment. We are focused on delivering on the brands we have,” he said.
Mr Harrison, who was one of 100 business leaders who signed a letter to the Telegraph supporting the Conservative party ahead of the UK election, said Whitbread was apolitical, but that he supported the reduction in corporation tax carried out by the government, which had saved the group £60m.
Simon French, an analyst at Cenkos, said Mr Harrison’s departure had been rumoured for some time. “We are relaxed [about his departure] because of the strength of the senior management team. We expect the new chief executive to be Chris Rogers, currently the managing director of Costa and previously the group chief financial officer,” he said.
He added that Mr Harrison’s departure may delay any demerger of Costa until the new chief executive has reviewed the business.