Whitbread reports declining sales trends at Premier Inn and Costa

Whitbread said it expected annual results to meet expectations as the company reported declining like-for-like sales at its Premier Inn and Costa businesses in the first quarter.

Total sales at Premier Inn rose 2.5% but at hotels open a year or more sales fell 0.9%. At the Costa coffee chain, which Whitbread plans to spin off, total sales rose 5.2% but like-for-like sales fell 2%, the company said in a trading update.

Total group sales rose 3.2%, fuelled by opening new hotels and coffee shops. On a like-for-like basis the hotel market was weak compared with strong figures a year earlier and also suffered from increased supply, Whitbread said.

At Costa sales fell as shoppers stayed away from high streets where the chain has most of its shops. Sales at those stores fell 2.9% but the decline was slightly offset by 1% growth in like-for-like sales from self-service coffee machines at petrol stations, convenience stores and other outlets.

Alison Brittain, Costa’s chief executive, said: “We expect to deliver in line with expectations for the full year and we continue to make strong progress on our efficiency programme.”

Brittain took over at Whitbread in January 2016 just as years of booming coffee sales came to an end. Costa has suffered from squeezed consumer spending power and lower footfall on high streets – trends that have forced several large retailers to close stores or cease trading.

Neil Wilson, chief market analyst at Markets.com, said Whitbread reported "a decent quarter overall" but added: "The continued weakness in like-for-like sales growth is a concern."

"This 2% drop is a concern about how the brand is performing on the high street," Wilson said. "Lower footfall is one thing, but we continue to see Costa facing tougher competition from artisan coffee retailers who are taking market share."

In April Brittain announced plans to split off Costa into a separate company leaving Whitbread as a hotel business with restaurant brands including Beefeater and Brewers Fayre.

In the trading statement Brittain said Whitbread had started working on the demerger and was making good progress on infrastructure and efficiency work at Costa. Analysts said the update on plans for Costa was frustratingly brief.

Whitbread shares rose 1.9% to £39.65 at 11:45 BST.