Whitbread sees Olympics and wet weather boost fading
LONDON (Reuters) - Whitbread, Britain's biggest hotel and coffee shop operator, said sales growth would slow over the remainder of the year after a boost from the Olympic Games and a wet summer helped push first-half profit up 11 percent.
Whitbread, which operates Premier Inn hotels and Costa Coffee shops, said on Tuesday that pressure on consumer spending meant underlying sales growth would be less than the 4.3 percent achieved in the six months to August 30.
Britain's leisure and retail groups are mostly struggling as disposable incomes are squeezed by rising prices, muted wages growth and austerity measures.
"In the first half we saw Premier Inn have a small benefit from the Olympics, that won't be repeated, Costa Coffee had a small benefit from the wet summer, and our restaurant business has also benefited from relatively weak comparatives," Whitbread chief executive Andy Harrison told reporters.
"It was a really good first half performance but there were a couple of things that gave us an extra lift, so it is partly that and partly that we see the background consumer markets that drive our business are pretty flat."
Those cautious comments helped pushed shares in the FTSE 100 firm, which raised its interim dividend by 11.4 percent to 19.50 pence per share, down 1.6 percent to 2,286 pence by 0955 GMT.
"We remain cautious on current trading and the increasingly competitive environment in budget hotels," Panmure Gordon analysts said, maintaining a 'Hold' rating on Whitbread shares.
Whitbread, which also operates the Beefeater and Brewers Fayre pub restaurant chains, said underlying first-half pretax profit grew 10.6 percent to 193.4 million pounds, in line with an average forecast of 192.4 million pounds, according to a company-supplied poll of seven analysts.
UK sales at Premier Inn hotels open more than a year were up 3.7 percent, helped by more customers staying in London for the Olympics, while sales at Costa Coffee shops open more than a year jumped 6.8 percent, as coffee lovers chose its stores to shelter from the summer's miserable wet weather.
Harrison said the firm had not seen any "demonstrable impact" from the bad headlines its rival coffee chain Starbucks has attracted over its UK tax affairs.
"Every consumer including me has the right to choose Costa over Starbucks and that's what I would recommend," he told Sky News.
Group revenue rose 14.2 percent to just over 1 billion pounds. Like-for-like sales at the group's restaurant chains were also up 3.4 percent.
Costa has expanded rapidly on an explosion in popularity of coffee shops in Britain, and is seen by many as an affordable luxury despite the economic pressures faced by consumers. Harrison said sales had also been boosted this year by its ice cold coffee and British themed cake and biscuits ranges.
Growth at its Premier Inn chains has been boosted by cost conscious customers trading down from pricier five and four star hotels to its more affordable rooms.
Revenue per available room (RevPAR) - a key industry measure - rose 2.4 percent, incorporating 4.4 percent growth in London, and 1.9 percent across other UK regions.
Whitbread said it was on track to open 4,500 rooms at Premier Inn this year, with a particular focus on London, while the group is expanding into India, the Middle East and Asia Pacific internationally.
The firm said it was also on track to open 350 Costa stores worldwide this year, half of which would be in the UK.
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