Whitbread sales slow to 11.1% in second quarter

8th Sep 2015 07:10

(ShareCast News) - Total sales grew by 11.1% at Costa coffee shops and Premier Inns owner Whitbread in the second quarter as like-for-like sales advanced 3.3%.This represented a slowdown from the first quarter, when total sales rose 12.5% and LFL sales grew 4.3%, resulting in 3.9% LFL growth for the first half.The FTSE 100 group said in order to cope with the recently announced National Living Wage it aimed to increase efficiencies and make some selective price increases.Premier Inn grew total sales by 11.6% with rooms available growing by 7.9%, total revenue per available room growing by 3.9% and occupancy remaining high at 87.0%.Costa maintained its rapid growth with total sales frothing up 16.2% and UK retail system sales up 14.8%.Costa's UK LFL growth was softer than the same period last year at 4.0%, as weather and holiday patterns hit August trading.The restaurants business only grew LFL sales 0.6% but the company argued this represented an outperformance of the continuing soft pub restaurant market.Chief executive Andy Harrison explained plans to cope with George Osborne's new minimum wage: "We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases.""Our first half performance keeps us on track to deliver full year expectations, as well as our ambitious growth milestones."Harrison said over the course of the year Whitbread planned to open roughly 5,500 UK rooms, around 220 net new Costa stores worldwide and to install 700-800 new Costa Express machines. The committed UK hotel pipeline has grown to 14,106 rooms.Analysts at Shore Capital said: "The performance was slightly below expectations but first half trading is consistent with our FY expectations of 3-4% growth."Within the mix, they noted that Premier Inn revpar growth has slowed to 3.3% reflecting only 1.5% growth in London, whilst Costa remained robust."We wonder if some of the upside risk to forecasts, which is arguably priced into the shares, has been reduced following today's update."Nomura noted that while the first half generally sees fewer new openings, the company opened 800 Premier Inn rooms of a planned 5,500 but maintained FY guidance, though Costa guidance has changed slightly to 60 franchised, low-margin store closures. The Japanese bank added: "We currently take a more bullish view of RevPAR than management's guidance (5%). The London market has started to recover in recent months and the Rugby World Cup should be supportive for demand in over 10 UK cities over the next six weeks."