Slowing growth at Costa Coffee owner Whitbread left a bitter taste with investors after the leisure giant’s new boss disappointed shareholders for a second time with her latest update.
Alison Brittain, who took the helm at the FTSE 100 business in December, conceded that the company faces a tougher trading environment after posting just 0.5pc same-store sales growth at the Costa business, well short of the 3pc that had been expected for the 11 weeks to February 11.
Overall, like-for like sales at Whitbread, which also owns Premier Inn, slowed to 1.7pc in the fourth quarter, from the 3.5pc recorded in the previous quarter. The sharp drop sent its shares tumbling as much as 6.3pc, making the stock one of the heaviest fallers in the FTSE 100 in early trading on Thursday.
Deutsche Bank analysts said Costa had suffered its weakest growth since the final quarter of 2009 and Ms Brittain blamed the slowdown on the high-street downturn in the run-up to Christmas amid unseasonably warm winter weather.
“We had a negative December,” the Whitbread boss said, although she insisted the quarter was not indicative of an underlying trend. Ms Brittain said the coffee-shop market in Britain, which has expanded rapidly in recent years, is “still growing”.
However, she admitted the coffee industry is “a bit more competitive”, adding that this was spurring Whitbread to test different formats, such as a new Costa Pronto grab-and-go style outlet it is currently trialling in London.
The performance of Whitbread’s Premier Inn business also disappointed, with revenue-per-available room (revPAR) up just 0.4pc on a like-for-like basis.
Ms Brittain said revPAR – a key hotel industry measure – had been hurt by extensions Whitbread had built on its properties, which will add 1,500 rooms this financial year. While the expanded Premier Inn hotels are busy, predominantly with business customers, during the week, the company has had to cut prices at the weekend to fill up the extra rooms, which had affected revPAR, she said.
It was the second trading update from Ms Brittain since she took charge, and the second time that Whitbread has disappointed shareholders under her watch. The first update that Ms Brittain delivered, during her maiden week as chief executive, had also sent Whitbread shares sharply lower.
Asked whether the new job was proving harder than she had expected, the Whitbread boss said: “Had I been here a year ago it would have probably felt an easier trading environment.” However, Ms Brittain added: “I do love the challenge.”
She is due to outline her strategy for Whitbread next month.
