It is a truth universally acknowledged that a CEO in search of a legacy must go out on a high. Just look at Terry Leahy and Justin King, who both left their respective supermarkets before the price wars started drawing blood. The latest chief exec to follow that playbook is Whitbread’s Andy Harrison, who is leaving behind double-digit growth in both sales and profits.
‘I am 58 in two days’ time. I have been a chief executive of three public companies for 18 years. It is time to do something a little bit less demanding,’ said Harrison, who joined Whitbread from EasyJet in September 2010, having also been chief exec of RAC.
That ‘little bit less demanding’ thing is the chairmanship of home furnishings retailer Dunelm, which he joined as a non-executive director last July. The FTSE 250 company’s shareholders gave the news a nod of approval, with shares up 1.18% to 900p in mid-morning trading.
Whitbread’s, on the other hand, fell 1.65% to 5,350p, despite the aforementioned barnstorming results and a 19.4% increase in the dividend. No wonder - under Harrison’s tenure, the company’s market cap has rise 261% to £9.65bn.
Credit: Yahoo Finance
Investors shouldn’t be too worried, though. The group’s sales for the year to February 267 were up 13.7% to £2.6bn, while pre-tax profits rose a third to £464m. Costa Coffee’s results were especially piping hot (but not frothy, one hopes), with underlying profits up 20.7% to £132.5m. There has been consistent speculation Whitbread will spin off the coffee shop chain, but Harrison, who is officially leaving in February 2016 claimed it was ‘definitely not on the agenda’.
What was on the agenda was a new five year plan (every capitalist’s favourite Stalinist invention): growing Premier Inn’s UK rooms 43% to around 85,000 and increasing Costa’s sales around 80% to £2.5bn by 2020.
And what of Harrison’s successor? All the company said was that chairman Richard Baker was ‘considering external and internal candidates’. Cenkos analyst Simon French had other ideas. ‘We are relaxed [about Harrison’s departure] because of the strength of the senior management team. We expect the new chief executive to be Chris Rogers, currently the managing director of Costa and previously the group chief financial officer.’
Whether they’re a seasoned barista or new bellboy on the hotel block, they’ll have some king-size shoes to fill. Good thing Brits are so caffeinated.