Sales growth at Whitbread, the FTSE 100 leisure group behind Costa Coffee and Premier Inn, has picked up in the first quarter, despite a weakening hotels market in the UK.
Like-for-like sales across the group rose 1.8 per cent in the 13 weeks to June 2, its first quarter, up from 1.7 per cent during the final quarter of its last financial year.
This was despite a slight weakening in sales growth at Premier Inn. Like-for-like sales rose 2.1 per cent in the latest period, down from 2.2 per cent growth during the previous quarter. But sales growth at Costa recovered significantly. First quarter like-for-like sales at Costa rose by a more robust 2.6 per cent compared to just 0.5 per cent growth during the final quarter of last year.
Whitbread said Premier Inn continues to win market share but warned that the hotels market in Britain has been “weaker than expected”, particularly in London. Even so, the group said it remains confident of “making good progress” this year as it also pushes through a programme to keep a lid on costs.
Chief executive Alison Brittain said:
Whitbread delivered total sales growth of 8.0% in the first quarter as we continue with a relentless focus on our customers, innovation and investing in our strong brands. Costa has started the year well and Premier Inn continues to win share, albeit in a weaker than expected hotel market.
Ms Brittain, who took the helm at the end of last year, had a tough start to the job, having to unveil two sets of disappointing quarterly results. However, analysts were reassured after the company’s full year results in April, as Ms Brittain reaffirmed growth targets, set by former boss Andy Harrison at a time when the outlook was looking healthier.
Ms Brittain ran the rule over the targets to gauge whether they were still achievable in a climate where Costa faces increased competition from independent coffee shops that try to win customers over with artisan brews, while hoteliers have come under pressure from Airbnb.
Prior to today’s update, analysts had been expecting like-for-like sales growth at Premier Inn of 1.6 per cent and 1.9 per cent growth at Costa Coffee, according to a Bloomberg poll. Last year like-for-like sales across the group rose 3 per cent, which was down from much stronger growth of 6.5 per cent the previous year.