MILAN – Costa Coffee reported today a 2% fall in like-for-like sales in the first three months of the year. Costa’s parent company Whitbread said sales at UK’s biggest coffee chain were dented by Britain’s high street woes.
However, total UK sales growth were up by 5.2% thanks to new store openings and Costa Express expansion.
Total sales at Whitbread, including international, rose 3.2%, and 4.9% at Costa.
Revenue at Whitbread’s hotels chain, Premier Inn, was up 2.2% over the quarter.
“The UK like-for-like sales decline resulted principally from footfall weakness in traditional shopping locations, whereas travel locations continued to show good growth” reported the company in a press release
UK High Streets have been struggling in recent months with big names closing stores and restaurants and some retailers shutting down altogether.
Costa said it was now actively refocusing its network towards “high-footfall and convenient locations”.
“Our stores remain highly profitable and deliver an excellent return on capital,” stated Whitbread boss Alison Brittain.
“Both the budget hotel market and the coffee market present long-term structural growth opportunities, and, whilst we are cautious of shorter-term trading conditions in the UK, due to well-publicised consumer trends, we are confident that we have the right strategies in place to enhance our UK and international market positions and ensure each business is well-positioned to thrive as a separate entity.”
Whitbread said earlier this year that it will split the Costa chain and list it as a separate entity, following pressure from activist investor Elliott.
“Constructive early steps have been taken in preparation for the demerger and good progress continues to be made on the core infrastructure and efficiency work that was already under way,” Whitbread added.
The spun-off Costa firm will be floated and listed as a separate business by 2020. A further update on the demerger will be provided in October.
