Costa Coffee Helps Whitbread Plc To Double-Digit Sales Growth

Shares in Whitbread (LSE: WTB) dipped 3.4%, or 87p, to 2,476p this morning, despite positive news following the release of the company's fourth-quarter trading statement.

The UK's largest hotel and restaurant group announced total Q4 sales growth of 16.9%, a 2.7% rise in like-for-like sales that was "slightly suppressed by adverse weather conditions in January", but boosted by a huge 32.2% increase from its Costa Coffee brand (5.5% LFL). This performance was no doubt helped by the bad press surrounding rival Starbucks, which has led to many boycotting the American chain over its alleged tax avoidance here in the UK.

Elsewhere, the Premier Inn chain of hotels saw a healthy 14.1% increase in total sales (2.9% LFL), while 'other hotels and restaurants' soared 9.1% (1.7% LFL) and 'other restaurants' contributed a 2.7% rise (0.2% LFL).

For the 50 weeks to 14 February 2013, Whitbread again announced double-digit total sales growth, of 14.8% (3.7% LFL). Premier Inn saw a 12.9% rise in total sales (3.2% LFL), while 'other hotels and restaurants' jumped 9.7% (2.9% LFL). 'Other restaurants' increased 4.7% rise (2.3% LFL), while Costa leaped a whopping 26.9%, or 6.6% LFL.

Chief executive Andy Harrison commented:

"Our strong brands continue to win market share, supported by our highest ever guest satisfaction scores and rapid expansion of our network. Good like for like sales growth of 3.7% demonstrates the consumer appeal of our brands and also enables us to reinvest in our people and facilities and to grow our estate.

"We see no change to market conditions, although we expect a more competitive environment. We shall continue to deliver good organic growth and are on track to achieve our 2016 growth milestones."

Clearly, Whitbread's key brands of Costa and Premier Inn are performing strongly, and investors will be encouraged by plans to open a further 320 net new stores worldwide and around 1,300 Costa Express units in the full year, and 4,300 new rooms and ten joint site restaurants in the UK this year respectively. Management confirmed that the company remains on track to deliver full-year results "in line with expectations".

Whitbread has seen phenomenal growth over the last five years, with its shares multiplying almost four-fold since 2009's low of 694p, and hitting a high of 2,632p at the end of last week. As we've seen commonly lately, today's fall in value probably has much to do with investors choosing to take profits at what might be the peak of a bull run.

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