- Like-for-like sales turn positive
- Germany on course for breakeven
- Shares buyback continues
Shares in Whitbread (WTB) gained 4% to £30.21, topping the FTSE 100 performance table, after the Premier Inn owner said it experienced a pick-up in trading towards the back end of the 13-week period to the end of May.
The shares are down 17% since the beginning of the year compared with a 6% gain for the benchmark FTSE 100 index.
AN IMPROVING TREND
Group sales grew 1% to £739 million driven by an improved performance in the UK and continued progress in Germany.
In the UK, following a soft first seven weeks which saw like-for-like sales down 1%, revenue per available room 1.6% lower and food and beverage sales down 1% lower, total sales over the full 13 weeks ended flat year-on-year.
Shore Capital’s leisure analyst Greg Johnson estimates this implies like-for-like sales improved to flat to moderately positive towards the back end of the quarter.
‘With forward bookings remaining positive, we would anticipate trading strengthening heading into peak summer season’, said Johnson.
‘We estimate that Whitbread requires circa 2% LFL UK revenue growth for the balance of the year to meet our full-year assumptions. Supporting this, net cost inflation is now expected to be at the lower end of the 3% to 4% guidance range.’
Premier Inn Germany reported accommodation sales up 15%, led by the increasing maturity of the estate and site expansion and the company said it remained on track to break even during the second half of 2024.
WHAT DID THE CEO SAY?
Chief executive Dominic Paul commented: ‘Whilst the normal booking pattern means our forward visibility remains limited, our forward booked position is positive and we remain confident in the full-year outlook.
‘With significant potential in both the UK and Germany, supported by the structural reduction in supply and our asset-backed balance sheet, our strategic plans are set to deliver a step change in our performance.’
The company continues to execute its £150 million share buyback programme with 3.2 million shares purchased so far for a consideration of £96 million.
EXPERT VIEWS
Shore's Johnson maintained his 2025 financial year pre-tax profit estimate of £525 million and said he was encouraged by the improving trend in revenue per available room versus his UK full year assumptions.
‘With cost inflation now set to be at the lower end of guidance, our estimates can likely be achieved on circa 1% LFL growth, or 2% for the balance of the year’, he concluded.
AJ Bell investment director Russ Mould commented: ‘The latest update implies Whitbread is wading through mud in the UK with like-for-like sales for accommodation and food and drink both in decline.
‘Given the circumstances, Whitbread might view this performance as resilient as the rate of UK sales decline is only marginal. However, it does put more pressure on the business to have a bumper summer if it wants the first-half results to shine.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author if the article (Martin Gamble) and the editor (Ian Conway) own shares in AJ Bell.
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