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Whitbread reports good Q1

Whitbread grows, but like-for-like sales fall.
June 27, 2018

Shares in Whitbread (WTB) were up after the company reported 3.2 per cent group sales growth in its first quarter, driven by new Premier Inn hotels and Costa Coffee shops. Premier Inn opened 664 rooms in the period, boosting sales by 4.3 per cent, but revenue was flat on a like-for-like basis. Management said new capacity has a short-term impact on comparable sales, but should drive long-term growth. UK sales growth at Costa was up 5.2 per cent thanks to new stores and Express machines, while comparable revenue fell 2 per cent due to lower footfall on high streets.

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“Constructive early steps” have been made in the Costa demerger, announced in April. Given the debt structure and pension fund, this looks like it will be a complex process. Analysts at Stifel believe a standalone Costa could increase the chances of corporate activity. They think a buyer with the ability to support the coffee chain’s international expansion could come forward before the demerger is complete, which could be the “best outcome” for shareholders.