Whitbread running out of steam

Shares in Costa Coffee and Premier Inn owner Whitbread dived on news that like-for-like sales (LFL) growth has slowed.

Although total sales for the company's third quarter - the 13 weeks to December 1st - were up 11.4% on a LFL basis, there are signs that the even the company's coffee shops are starting to run out of steam. For the group as a whole, sales at outlets which have been open longer than a year rose just 2.4% year-on-year compared to 3.3% growth in the first half.

Speaking on a conference call, chief executive Andy Harrison said: "I would say this is a reflection of the general economic climate, but I would say that's pretty impressive growth in total sales."

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Costa Coffee was the best performing division, with LFL sales growth of 3.8% in the 13 weeks to December 1st, but in the preceding six-month period the ubiquitous coffee-shop chain had been seeing LFL growth of 6.7%. Meanwhile, sales at Premier Inn hotels grew just 2.6% in the third quarter compared to 5.2% in the previous half.

The Restaurants division saw LFL sales growth of 1.1% while the Hotels & Restaurants division's LFL sales growth was 2.1%.

"Our like-for-like sales performance keeps us on track to deliver full year results in line with expectations," Harrison added.

Despite industry data showing that revenue per available room growth in London and the provinces has virtually disappeared, Premier Inn's LFL revenue per available room grew by 9.4% in London and 2% in the provinces.

The total number of rooms sold by Premier Inn rose 7.4% to 9.6m.

During the year Costa opened 277 new stores, while LFL sales in UK equity stores were up 5.6%, with transactions up 6.0%. In 2011/12, the group is set to open 4,000 new rooms and 300 Costa stores.

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