Whitbread suffers lacklustre sales at Costa and Premier Inn
Whitbread has become a victim of tough trading in the third quarter after serving up lacklustre sales growth across Costa Coffee and Premier Inn.
Costa's UK like-for-like sales slipped 0.1% during the three-month period and growth at its hotel business was flat, with the group expecting difficult conditions on the British high street to continue.
The company has around eight Premier Inns and 20 Costas in Northern Ireland.
Chief executive Alison Brittain said Costa's UK cafes were "highly profitable", but the "well-publicised weak retail market footfall" was harming its stores - and would do so "for some time".
On Premier Inn, she said there were signs of "market weakness", with occupancy and average room rates dropping year-on-year.
However, total UK sales made for brighter reading, with Costa and Premier Inn expanding by 7.2% and 5% respectively for the three months. Ms Brittain said the FTSE 100 firm was on track to hit its annual targets as it reaps the rewards of a group-wide efficiency drive.
She said: "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."
Focusing on the group, Whitbread said like-for-like sales were up 0.3% and total sales rose 5.8% across the third quarter.
The update comes amid reports on Wednesday that activist investor Sachem Head wants Whitbread to hive off Costa Coffee to increase value.