Whitbread splashes £60m on Coffee Nation

2nd Mar 2011 07:13

Revenue growth at hotel, coffee shops and pubs group Whitbread slowed sharply in the past four months, though it still made steady headway.The group also unveiled a major expansion of its Costa chain with the acquisition of Coffee Nation for £59.5m and a new brand, Costa Express which will target the self-serve coffee bar sector.Coffee Nation operates 900 shops. Costa will use the purchase of Coffee Nation to develop Costa Express and is targeting 3000 bars across the UK over the next five years, capable of quadrupling its profit contribution. This is in addition to Costa's continuing rapid growth of its store network, Whitbread said.In a trading update, Whitbread added that in a seventeen week period that included the blizzards of December, like-for-like sales growth slowed to 3.9% from 6.7% over a fifty week period.Total sales held up better, rising by 12.4% over the past four months to 17 February against 13.7% for the year so far.Like-for-like sales slowed across all of Whitbread's main divisions, though all still posted very respectable sales increases. Premier Inns's sales rose by 5.1% lfl over the past 17 weeks and pub restaurants by 3.1%. Costa sales rose by 3% lfl."We anticipate that the outturn for the year will be in line with market expectations, demonstrating strong profit growth. Whilst it is premature to judge the trajectory of the UK consumer economy in 2011 we shall continue to invest in growing our strong brands," chief executive Andy Harrison said.