Costa coffee owner Whitbread sees 'tougher' times ahead

Whitbread (Frankfurt: WHF4.F - news) , the company behind Costa coffee and Premier Inn, has endured a 7% fall in its share price after warning of a "tougher consumer environment".

It was the biggest faller on the FTSE 100 after pointing to growing pressures on customer budgets in the wake of the Brexit vote.

Its preliminary results statement for the year to March showed total revenue growing 6.3% in the 53-week period, to top £3.1bn, while profit before tax jumped 5.7% to £515.4m.

Whitbread reported like-for-like sales growth across its brands, with Costa sales rising 2%. Premier Inn revenue grew 2.3% by the same measure.

Market analysts said evidence of slowing sales and profits missing expectations contributed to the share price decline.

The company launched a £150m cost efficiency programme last November, which included new supplier deals to help limit its exposure to rising import costs as a result of the slump in the value of the pound following the EU referendum.

It said on Tuesday that the progress it had made had helped it maintain profit margins.

Whitbread opened 255 new coffee shops in the UK and abroad over the year - launching five concept stores in China.

It also said it was well-placed to grow Premier (BSE: 500540.BO - news) in the UK, given its value proposition, as families start to feel the effects of the currency's weakness on overseas holiday budgets amid rising inflation and weaker wage growth .

Whitbread's warning of tougher times for consumers was recently backed up by official figures which showed price increases damaging retail sales in March.

Commenting on the future, chief executive Alison Brittain said: "In the year ahead we will continue to focus on organic growth and investing in our customer proposition.

"This, together with our efficiency programme and disciplined capital management gives us confidence in delivering another year of good progress, in line with overall expectations.

"Whilst we are only seven weeks into our new financial year, Premier Inn has had a good start to the year and Costa has also seen positive like for like sales growth, although we remain cautious and expect a tougher consumer environment than last year.

"In the longer term we remain confident that, with our significant structural growth opportunities, the power of our brands and the investments we are making, we will continue to deliver strong returns and sustainable long-term growth for our shareholders".