Whitbread sales rise, but company warns over UK outlook

Premier Inn owner Whitbread has posted higher third-quarter sales and backed its full-year guidance, but warned over the environment in the UK.

The company, which recently sold its Costa coffee chain to Coca-Cola for £3.9 billion to become a pure-play hotel business, also announced it will return up to £500 million to shareholders.

The FTSE 100 firm said it remains cautious about the environment in the UK next year due to “uncertainty and higher inflation”.

It said the “UK environment remains subdued and sustained inflation continues to be a significant challenge” and, as a result, Whitbread expects underlying pre-tax profit for fiscal year 2020 to be in line with fiscal year 2019.

Chief executive Alison Brittain said: “We are cautious about the macro environment for the next financial year due to increased uncertainty and continuing high inflation.

“Although we are confident in our ability to create value from ongoing investment in the UK and increasing investment in international growth, in this environment we expect underlying profit before tax in FY20 to be consistent with this year.”

She added that Whitbread’s “unique model and leading market position in the UK puts us in a strong position to capture structural growth opportunities in the UK and internationally”.

Total UK sales increased 2.5% in the third quarter, but on a like-for-like basis sales fell 0.6%. Total UK and international sales increased 3.5%.

The company said it is on track to meet expectations for the full year.

Following the sale of the Costa business, Whitbread is now focused on its hotel business with more than 800 in the UK, Germany and the Middle East, and it expects to add over 200,000 new rooms.

Sales for its Premier Inn hotel chain rose 3.5% in third quarter, but like-for-like sales slipped 0.2%.

Whtbread said the London market was strong in the third quarter for Premier Inn, but the regional market continued to weaken due to “lower consumer and business confidence, along with sustained levels of inflation”, and this trend has continued into the fourth quarter.