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UPDATE 1-Whitbread eyes Costa expansion in France as profit jumps
April 29, 2014 / 9:17 AM / 4 years ago

UPDATE 1-Whitbread eyes Costa expansion in France as profit jumps

* FY Adj PBT up 16.5 pct to 411.8 mln stg

* Costa to open five new stores in France

* Says trading in new fiscal year started well (Write through, adds quotes, shares)

By Neil Maidment

LONDON, April 29 (Reuters) - Britain’s Whitbread beat forecasts with a 16.5 percent jump in full-year profit and said it would expand its Costa Coffee chain in France after a trial showed strong demand.

Britain’s biggest hotel and coffee shop operator has grown rapidly due to demand from cost-conscious customers for affordable hotels and an increasing trend for takeaway coffee, and has set its sights on further expansion at home and abroad, with a particular focus on China, and now France.

The group, which has more than 2,800 Costa stores globally, including 1,755 in the UK and 326 in China, opened four wholly owned stores in Paris last year and has slated five more in 2014-15.

“That’s been our first foray into France ... It’s still just a first step but it’s one we’re really quite encouraged by,” Whitbread chief executive Andy Harrison told Reuters on Tuesday.

“We have opened our own stores because we think France could be a big market. We’ve gone into Spain and have franchised there, whereas France we have gone in ourselves because we think it could be sizeable.”

Some analysts have said expanding Costa in developed European markets could deliver bigger rewards than growing in China through joint ventures, which may not yield big profits for some time. Harrison would not say how many stores he thought France could hold but said that any ramp-up in openings would be in the next financial year, rather than in 2014-15.

U.S. rival Starbucks has already opened dozens of outlets in France in an attempt to compete with the thousands of family-run cafes along boulevards in Paris and other cities.

Whitbread, which also runs Premier Inn hotels and pub restaurants such as Brewers Fayre, said on Tuesday that underlying pretax profit for the year to Feb. 27 grew to 411.8 million pounds ($692.16 million), up 16.5 percent on a year ago and ahead of analyst forecasts of 402 million pounds.

Shares in the firm, which also lifted its full-year dividend by 19.9 percent to 68.80 pence, have risen 58 percent in a year and were up 1.6 percent at 4,127 pence in early trading.

Total revenue rose 13 percent to almost 2.3 billion pounds, helped by new store and hotel openings and solid underlying UK sales growth at Premier Inn and Costa, up 5 and 5.7 percent respectively on a year ago.

Premier Inn’s revenue per available room (RevPAR), a key industry measure, rose 5.4 percent for the year, benefiting from an improving hotel market and business confidence in both London and the group’s much larger regional business.

Whitbread said trading in the first two months of its new year had started well and that it was on track to reach 75,000 UK rooms by 2018, from 55,000 now, and double Costa sales to 2 billion pounds. ($1 = 0.5950 British pounds) (Editing by Sarah Young and Susan Fenton)

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