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Whitbread plc Reports Costa Coffee Sales Up 20.8%

The shares of Whitbread (LSE: WTB) slid 90p to 3,126p during early trade this morning after the hotel and restaurant group said its Costa Coffee chain had lifted its sales by 20.8% during the 24 weeks to 15 August.

However, the FTSE 100 member admitted trading within its Costa Coffee operation had been biased towards the colder weather during first quarter, with sales gaining ‘just’ 16.5% in the warmer second quarter.

The blue-chip added that the coffee chain was still on track to open around 300 new stores and 850 Costa Express units in the full year.

Today’s statement also reported the group’s Premier Inn chain had seen sales improve by 12%, and that its restaurant business had seen sales gain 2.5%. The overall top line climbed 12.4%, with like-for-like sales up 2.6%.

Andy Harrison, the chief executive of Whitbread, said:

We are on track with our annual plan and our ambitious five year growth milestones. Combined with our emphasis on returns, this growth should continue to create substantial shareholder value.

Prior to today, City experts had been expecting Whitbread to deliver current-year earnings up 9% to 163p per share and a dividend up 10% to 63p per share.

Following this morning’s share-price reaction, Whitbread’s shares may trade on a possible P/E of 19 and yield a potential 2%.

Of course, whether that valuation, today’s statement and the general outlook for pricey coffee and budget hotels all combine to make Whitbread a ‘buy’ right now is something only you can decide.

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> Maynard does not own any share mentioned in this article.