Whitbread on a roll as revenues rise 14%

More evidence of recovery this morning, as hotels and coffee business Whitbread posts caffeine-boosted Q3 results.

by Andrew Saunders
Last Updated: 29 Apr 2014

The owner of the Premier Inn budget hotel brand and the Costa coffee chain reports total revenues up 13.8%, thanks largely to the ongoing expansion of both businesses. Like for like sales for the third quarter rose 4.3%.
 
It seems that those Lenny Henry ads are working, as more punters from both the business and consumer markets are choosing to save money and stay in a Premier Inn – it’s the Aldi effect for hotels if you like. It has opened 22 hotels (around 2,700 rooms) this year, and plans to have added a total of 3,500 rooms by the end of its financial year in April. No sleeping on the job there, despite its famously comfy beds.
 
Over at Costa – the nation’s largest coffee chain – the picture is equally upbeat, with 133 new stores in the UK and 54 in China so far this year making a total of 2,773 outlets. Sales at Costa rose more than a fifth for the year to November, to £882m.
 
Chief exec Andy Harrison was bullish, saying ‘Our network expansion, as we deliver growth milestones, combined with a strong focus on returns, should continue to deliver substantial shareholder value.’
 
The restaurant business, which includes Beefeater and Brewers Fayre, did less well however. Trading remains tough outside the south east and like for like revenues rose a more modest 1.8% for the quarter.
 
Analysts reckon the group – which plans to increase the number of rooms available in the UK by 45% to 75,000, and double sales at Costa to around £2bn, all by 2018 - is on track to deliver full year profits of around £390m. Its expansion plans should also provide an extra 12,000 jobs over the next five years, to boot.
 
Shares in Whitbread hit an all time high of £36 last month, and although they have since dropped back a little to around £34. Double skinny lattes all round, and don't spare the chocolate sprinkles...

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