TIDMWTB
RNS Number : 1920C
Whitbread PLC
18 January 2018
18(th) January 2018
Whitbread PLC third quarter trading update FY18
Good total sales growth of 6.8% YTD and on track to meet full
year expectations
-- Third quarter total group sales growth of 5.6%
-- Group UK like-for-like sales growth of 0.3% reflecting recent tougher market conditions
-- Premier Inn UK third quarter growth of 5.0% driven by investment in new hotel capacity
-- Costa UK strong third quarter growth of 7.2% from new stores and Costa Express expansion
UK Like-for-like UK Total UK & International
Sales Growth Sales Growth Total Sales
Growth
-------------
Q3(1) YTD(2) Q3(1) YTD(2) Q3(1) YTD(2)
------------- ------------- ------------ ---------- ----------- ------------ --------------
Hotels 0.0% 2.4% 5.5% 7.3% 5.2% 7.2%
Restaurants 1.8% 1.3% 3.5% 2.7% 3.5% 2.7%
------------- ------------ ---------- ----------- ------------ --------------
Premier Inn 0.5% 2.1% 5.0% 6.0% 4.7% 5.9%
Costa(3) (0.1)% 1.0% 7.2% 7.9% 6.9% 8.3%
------------- ------------ ---------- ----------- ------------ --------------
Whitbread 0.3% 1.8% 5.8% 6.7% 5.6% 6.8%
============= ============= ============ ========== =========== ============ ==============
(1) Q3 = 13-week period ended 30 November 2017 | (2) YTD =
39-week period ended 30 November 2017
(3) Costa UK like-for-like includes UK equity stores (Q3:
(1.5)%) and Costa Express, further details below
Alison Brittain, Whitbread Chief Executive Officer,
commented:
"We have made good progress in executing our strategy and have
grown group sales so far this year by 6.8%. This growth, combined
with the results from our group-wide efficiency programme, means
that we are on track to achieve expectations for the full year.
Premier Inn UK achieved total hotel sales growth of 5.5% in the
quarter as we continued to deliver our strategy to win market share
through investment in new hotels and extensions, which will mature
to give strong returns over the next few years. Our performance in
the quarter moderated as the budget hotel market weakened and we
had a particularly challenging October. Although it is early in the
fourth quarter, performance so far has been encouraging and
reflects a return to year-to-date performance.
Costa UK has delivered strong total sales growth of 7.2% in the
quarter, as we pursue our strategy to increase our presence in high
footfall and convenient locations such as drive-thru and travel
locations and we are particularly pleased with the strong
performance of Costa Express. As a result of our channel strategy,
more customers are drinking more cups of our coffee than ever
before and we have gained market share. We have also continued to
invest in the overall customer proposition, including new coffee,
food and digital capability. These improvements have been well
received by our customers and we have just been voted as the
nation's favourite coffee shop, for the eighth consecutive
year.
Our Costa high street stores in the UK are highly profitable and
generate strong returns. However, the well-publicised weak retail
market footfall is negatively impacting our high street stores'
like-for-like performance and we expect this to continue for some
time. Internationally, Costa in China continues its good momentum
with another quarter of positive like-for-like sales growth.
We remain committed to delivering our strategy to invest in the
attractive structural growth opportunities in the budget hotel
market and the growing coffee markets, in both the UK and
internationally. We do expect the tough UK high street environment
and inflation in our sector to continue to pose challenges in the
year ahead. However, we have good momentum in the delivery of our
plan to enhance our UK market leadership positions, create an
international business of scale in Germany, China and Costa
Express, and develop a more efficient infrastructure. This will
create further customer loyalty and deliver long-term growth in
earnings and dividends and a strong return on capital."
For more information please contact:
Investor queries
Matt Johnson, Whitbread PLC | matt.johnson@whitbread.com | +44
(0) 7848 146 761
Ann Hyams, Whitbread PLC | ann.hyams@whitbread.com | +44 (0)
7796 709 087
Matt Holman, Whitbread PLC | matt.holman@whitbread.com | +44 (0)
7712 243 322
Media queries
Anna Glover, Whitbread PLC | +44 (0) 7768 917 651
David Allchurch, Tulchan Communications | +44 (0) 20 7353
4200
For photographs and video please visit our media library on
www.whitbreadimages.co.uk
Premier Inn
-- Total sales growth ahead of the market in the UK at 5.0% in the quarter
-- Flat Hotels like-for-like sales reflects recent market weakness (YTD: 2.4%)
-- Growth driven by investment in new hotel capacity with good return on capital
-- Significant new capacity added whilst maintaining high occupancy above 80%
Q3 (YTD in Appendix I) Like-for-like Total Revenue
Sales Growth Growth
============== ==============
Hotels 0.0% 5.5%
Restaurants 1.8% 3.5%
-------------- --------------
Total Premier Inn UK(4) 0.5% 5.0%
International (inc. disposals)(5) n.a. (46.5)%
-------------- --------------
Total Premier Inn n.a. 4.7%
-------------- --------------
Like-for-like
Premier Inn UK metrics Actual Growth Growth
---------- -------------- --------------
Occupancy 83.3% (120)bps -
Average room rate GBP64.00 (0.2)% -
Revenue per available room GBP53.30 (1.6)% (1.5)%
Number of hotel rooms 71,282 - -
=================================== ========== ============== ==============
(4) UK & Ireland | (5) Includes Germany, recently exited
operations in India and Southeast Asia and other international
fees
Premier Inn UK
In the UK, Premier Inn has performed well and continued to win
market share with total sales growth in the third quarter of 5.0%
(YTD: 6.0%). This was a mix of like-for-like sales growth of 0.5%
(YTD: 2.1%) and the benefit of nearly 5,000 rooms added over the
last 12 months, with 3,200 rooms opened year-to-date. Room openings
in the current year have been significantly more weighted towards
the first nine months, compared to prior years which were fourth
quarter weighted. This timing of room openings has a temporary
effect on like-for-like performance, although new capacity is
expected to mature over the next few years.
During the third quarter, there were signs of market weakness,
most notably in London, with year-on-year declines in both
occupancy and average room rate. Within the quarter, Premier Inn'
performance in October was particularly challenging. However, early
performance in the fourth quarter is showing a general improvement
on the third quarter, although further insight on the forward
booking position will increase over the next few weeks. Market
weakness in London was partly driven by the relatively high level
of recent new capacity, which is expected to moderate in the year
ahead. London market capacity growth included more than 2,500
Premier Inn rooms added over the last two years, which has
increased Premier Inn's capacity in London by more than 25%.
Premier Inn has added more than 10,000 rooms over the last two
years, representing a more than 15% increase in capacity. This has
been achieved whilst also maintaining occupancy over 80%,
increasing average room rates to almost GBP65 per night and
delivering strong return on capital. During this period of growth,
Premier Inn has also increased the proportion of customers booking
direct to over 95%.
Premier Inn is also confident of increasing its capacity to
85,000 rooms by 2020, with the remaining 13,700 rooms now secured
through a mix of extending existing hotels, new freehold
developments and new leasehold hotels.
Premier Inn International
Whilst overall International sales fell due to completing the
exit of underperforming hotels in India and Southeast Asia, Premier
Inn's first hotel in Germany continues to perform well, providing
us with confidence to extend the network. A further hotel in
Dortmund has been added to the committed pipeline, bringing the
total to 10 hotels, which will deliver a further 2,200 rooms. In
the year ahead, hotels will be opened in Munich, Leipzig and
Hamburg, comprising 550 rooms. Work is continuing to accelerate
this pipeline through a mix of freehold and leasehold development,
as well as exploring small acquisition opportunities.
Costa
-- Good UK revenue growth of 7.2% in Q3 driven by strong performance in growth channels
-- UK equity store like-for-like performance reflects the general retail market conditions
-- UK Costa Express continuing strong performance with Q3 total sales growth of 20.4%
Q3 (YTD in Appendix Like-for-like System Total Revenue
I) Sales Growth Sales Growth Growth
============================ ============== ============== ==============
UK equity stores (1.5)% 4.9% 4.9%
UK Express locations 6.7% 20.4% 20.4%
UK Franchise & Other n.a. 6.5% 2.9%
Total Costa UK (0.1)% 7.5% 7.2%
International n.a. 2.1% 4.2%
-------------- -------------- --------------
Total Costa n.a. 6.3% 6.9%
-------------- -------------- --------------
Costa network size
Number of UK equity
stores 1,357
Number of UK franchise
stores 1,032
Number of Express machines
(UK & Int.) 8,046
Number of China stores 425
============================ ============== ============== ==============
Costa's revenue has grown by 6.9% in the third quarter and by
8.3% year-to-date, principally through the addition of new capacity
in attractive channels with high footfall in the UK, key
international markets and the ongoing expansion of Costa
Express.
Costa UK
Through both retail stores and Express machines, Costa continued
to take advantage of the growing coffee market in the UK with 7.2%
total revenue growth in the third quarter (YTD: 7.9%) and (0.1)%
like-for-like sales (YTD: 1.0%). This expansion was delivered
through a targeted investment programme to open new stores in high
footfall locations - principally in drive-thru, retail park and
travel locations and the growing demand for quality and convenience
that Costa Express provides.
Performance declined in traditional high street stores
reflecting weakening footfall, with trading on the high street
expected to remain subdued in the near term. However, a significant
programme of work is well underway to improve the overall customer
proposition, including new coffee product development, enhancements
to the food offering and improvements in digital capabilities,
which offset some of the declines in high street footfall. During
the quarter, customers responded well to the improved food offer,
with a good increase in the proportion of customers buying food
with their coffee. In addition, the new Costa Club loyalty app was
launched in November 2017, which now has 1.2 million active
users.
Costa Express has continued to perform exceptionally well in the
UK with total sales growth of 20.4% in the third quarter to almost
GBP60 million (YTD: 18.7% total sales growth to over GBP150
million), which represents more than 15% of Costa's total revenue.
Costa Express UK delivered good like-for-like same location sales
growth of 6.7% in the third quarter (YTD: 6.4%) and has added over
1,000 net new machines over the last nine months. New machines have
been added through strong commercial partnerships with petrol
station and convenience store operators.
Costa International
The international business is now operating in 31 countries.
Total sales growth moderated in the third quarter due to the
closure of the equity-owned business in France, together with the
closure of underperforming stores in China. Following enhancements
to the management team and refocusing the strategy, Costa China has
continued to perform well with total revenue growth in China of
5.3% year-to-date.
There are significant opportunities in Costa Express and Costa
China to build businesses of scale with strong return on capital.
To achieve this, it is expected that investment will increase over
the next year.
Appendix I | Sales information for 39-week period ended 30
November 2017
Premier Inn
Year-to-date Like-for-like Total Revenue
Sales Growth Growth
============== ==============
Hotels 2.4% 7.3%
Restaurants 1.3% 2.7%
-------------- --------------
Total Premier Inn UK(4) 2.1% 6.0%
International (inc. disposals)(5) n.a. (4.3)%
-------------- --------------
Total Premier Inn n.a. 5.9%
-------------- --------------
Like-for-like
Premier Inn UK metrics Actual Growth Growth
---------- -------------- --------------
Occupancy 82.3% (90)bps -
Average room rate GBP64.92 1.7% -
Revenue per available room GBP53.41 0.6% 0.7%
Number of hotel rooms 71,282 - -
=================================== ========== ============== ==============
Costa
Year-to-date Like-for-like System Total Revenue
Sales growth Sales Growth Growth
====================== ============== ============== ==============
UK equity stores (0.1)% 5.9% 5.9%
UK Express locations 6.4% 18.7% 18.7%
UK Franchise & Other n.a. 7.0% 5.6%
Total Costa UK 1.0% 7.9% 7.9%
International n.a. 9.2% 11.0%
-------------- -------------- --------------
Total Costa n.a. 8.2% 8.3%
-------------- -------------- --------------
Like-for-like sales growth definition
Like-for-like sales are stated Pre IFRIC 13 for UK hotels and
restaurants, UK Costa equity stores and UK Express machines.
Post-IFRIC for the 39 weeks to 30 November 2017 Hotels
like-for-like and total sales would be the same; Restaurants
like-for like and total sales growth would be 20 basis points
lower; Costa like-for-like sales growth would be the same; Costa
growth in total sales would be 20 basis points higher; and growth
in total system sales would be 10 basis points higher.
Like-for-likes sales growth for UK hotels and restaurants, UK
Costa equity stores and UK Costa Express machines measures the
period-on-period change of sales of hotels, restaurants, stores and
machines locations that have been open for more than one full
financial year.
Appendix II | Premier Inn UK hotels performance comparison
Q3
Year-on-year Premier Inn UK hotels Midscale
change &
economy
market(7)
===========
Like-for-like Total Like-for-like Total
Sales Sales RevPAR RevPAR
============== ======= ============== ======== ===========
London (5.6)% 6.2% (5.8)% (7.0)% (3.2)%
Regional 1.4% 5.4% (0.3)% (0.8)% 1.6%
-------------- ------- -------------- -------- -----------
Total UK 0.0% 5.5% (1.5)% (1.6)% 0.6%
============== ============== ======= ============== ======== ===========
YTD
Year-on-year Premier Inn UK hotels Midscale
change &
economy
market(7)
===========
Like-for-like Total Like-for-like Total
Sales Sales RevPAR RevPAR
============== ======= ============== ======== ===========
London (0.9)% 8.6% (0.7)% (2.0)% 2.0%
Regional 3.2% 6.9% 1.1% 0.9% 2.6%
-------------- ------- -------------- -------- -----------
Total UK 2.4% 7.3% 0.7% 0.6% 2.5%
============== ============== ======= ============== ======== ===========
(7) STR Global
This information is provided by RNS
The company news service from the London Stock Exchange
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