Costa Coffee sales buck up Whitbread’s share price

Added 21st June 2016

Whitbread’s share price climbed by 2.7% during Tuesday morning trading, making it the top performing FTSE 100 stock.

Costa Coffee sales buck up Whitbread’s share price

The index itself had an unremarkable morning after yesterday’s big rise, edging up 0.1%.

The company’s Q1 sales demonstrated persistent growth in 2016 with a 1.8% increase in total like-for-like sales for the 13 weeks to 2 June compared to 1.7% growth at the end of last year’s final quarter.

Whitbread’s Costa Coffee brand was its best performer in the first quarter, drawing in like-for-like sales of 2.6% and helping the company to weather “a weaker than expected hotel market.”

Its largest hotel chain, Premier Inn, outperformed analysts’ expectations generating like-for-like sales growth of 2.1%, down from 2.2% growth in the previous quarter.

Premier Inn did suffer a 1.2% decline in revenue per available room and saw occupancy year-on-year fall by 1.5% to 79.1%. However, Whitbread chief executive, Alison Brittain, confirmed the group will forge ahead with its plans to open 4,000 to 5,000 new hotel rooms between 2016 and 2017.

Ian Forrest, investment research analyst at The Share Centre, recommends the company as no more than a hold for medium risk investors seeking a balance of income and growth, despite Whitbread’s healthier looking shares.

“Although the company said it remains confident of making good progress for the full year, today’s statement confirmed that the challenge of slowing growth remains for Whitbread's new chief executive Alison Brittain,” Forrest said.

“Our preferred stock in the food and hotels sector is PPHE Hotel Group due to the more attractive valuation and better dividend prospects,” he added.

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