Whitbread Earnings Advance to Provide Relief for New CEOby
Shares gain as much as 4%, most in more than two months
CEO reiterates 2020 goals for growth in coffee shops, hotels
Whitbread Plc reported a 12 percent increase in full-year earnings, exceeding analysts’ estimates and providing some relief for Chief Executive Officer Alison Brittain after a tough start to her tenure.
Underlying pretax profit rose to 546 million pounds ($792 million), fueled by its Costa Coffee chain, Whitbread said Tuesday. The median estimate was 539 million pounds. The stock rose as much as 4 percent to 4,021 pence in London, the most in more than two months.
Whitbread shares have fallen about 15 percent since Brittain, the former head of retail banking and Lloyds Bank, became chief executive officer in December. Last month, the Dunstable, England-based company reported fourth-quarter sales that missed estimates at both Premier Inn and Costa Coffee, making Tuesday’s results all the more important.
“Ultimately Brittain needs results to move the share price, but we think today represents a welcome fresh expresso shot of energy,” Nigel Parson, an analyst at Canaccord Genuity, said in a note.
The CEO reiterated goals to expand the business to 85,000 U.K. hotel rooms and 2.5 billion pounds of coffee-shop sales by 2020. Speaking on Bloomberg Television, she also ruled out any immediate breakup of the company.
The board reviews the possibility of spinning off Costa Coffee on an annual basis, and currently sees no reason to change the structure of the company, she said.
Coffee consumption per head is lower in the U.K. than some other European markets, Brittain said in the interview, adding that she does not consider the U.K. coffee market to be saturated. New selling outlets such as drive-through stores will contribute more to Costa Coffee’s growth than traditional town-center locations, she said.
Christopher Rogers, the managing director of Costa Coffee, resigned earlier this month after an 11-year career at Whitbread. He will be replaced by Dominic Paul, an executive at cruise operator Royal Caribbean International.
“While it is only six weeks into our new financial year we remain confident of making good progress,” Brittain said in the statement.