Apr 25, 2017

Costa coffee owner Whitbread wary over prospects

The downbeat outlook from Whitbread, which also owns Beefeater restaurants and Brewers Fayre pubs, overshadowed news of an increase in profits last year. In the 12 months to 2 March, underlying pre-tax profits rose 6.2% to £565.2m, with total revenue op 8.2% to £3.1bn. Costa Coffee's like-for-like UK sales growth slowed to 2% from 2.9% in the previous year, although total sales at the chain grew by 10.7%, helped by the opening of 255 new cafes around the world and more Costa Express machines being installed. "Neil Wilson, analyst at ETX Capital trading company, said:"The company is growing sales but at a slower pace than in the past as it struggles to fight off consumer trends at its two key businesses - hotels and coffee. "One big issue is the growth of artisan coffee - smaller independent outlets are a bit more fashionable these days, which is denting growth prospects at Costa. The other is rise of Airbnb and its ilk, which is crimping growth at the Premier Inn hotel chain." Nicholas Hyett, equity analyst at Hargreaves Lansdown said Whitbread was continuing to "Deliver steady growth across both Premier Inn and Costa".

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