Costa's Woes Send Whitbread Shares Down Most Since Brexit Voteby
Coffee chain reports decline in sales in fourth quarter
Follows Starbucks’ concerns over EU exit, terrorism impact
Whitbread Plc shares dropped the most since Britain’s Brexit vote after the budget hotel and restaurant group reported a slowdown at its Costa Coffee chain.
The stock fell as much as 8.2 percent to 4,200 pence, the steepest intraday drop since June 27.
Like-for-like sales at Costa Coffee declined 0.8 percent in the fourth quarter, compared with growth of 4.3 percent in the previous three months. Whitbread echoed recent comments by Starbucks Corp. that economic headwinds including the U.K.’s decision to leave the European Union, as well as a rising terrorism threat, are hurting coffee-shop footfall.
The quarterly numbers were “disappointing,” Morgan Stanley analyst Jamie Rollo wrote in a note. The outlook is more encouraging, he said, with management suggesting that Costa has seen improved trading since the start of the new financial year.
Costa Coffee’s slowdown took the shine off results showing full-year pretax profit of 565 million pounds ($665 million), exceeding the average analyst estimate of 554 million pounds.
Earnings were helped by growth in the company’s Premier Inn chain, defying concerns that recent strength in the hotel sector is being predominantly driven by the luxury segment.