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The Markets
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Leisure, gaming and gambling

Soggy summer and wage hike hit Whitbread

August trading failed to match strong performance at the same time last year

--- adds analyst comment and background ---

Premier Inn and Costa Coffee owner Whitbread (LON:WTB) reported a damp August and a potential hit from plans to boost the national minimum wage.

Whitbread, which also owns pub restaurants Beefeater and Brewers Fayre, said business during the month was worse than expected due to bad weather and holidays.

Trading also failed to match strong trading during the same period last year.

Tory chancellor George Osborne announced a so-called "national living wage" (NLW) in his July budget, starting at £7.20 an hour and rising to £9 by 2020.

Some analysts and companies have said the plans could increase costs and hit jobs and training.

But Whitbread said it would respond to the planned increase with improved productivity, cost-cuts, price hikes and training investment.

Critics have described the NLW as simply a rise in the £6.50 an hour minimum wage because it does not meet the £9.15 that NLW campaigners deem as the minimum for a decent standard of living.

Chief executive Andy Harrison said: "Our first half performance keeps us on track to deliver full year expectations."

Group total sales rose by 11.8% and by 3.9% on a like-for-like basis in the 24 weeks to August 13.

Premier Inn increased total sales by 12.9%, like-for-like sales by 5.3%, total revenue per room by 4.9% and total room nights sold by 8% to 8.3mln.

Costa Coffee boosted its worldwide total sales by 16.7% and like-for-like UK sales by 4.6%. It plans to open about 220 stores after closing 60 less profitable petrol station outlets.

Restaurants lifted total sales by 1.7% and like-fo-like sales growth of 0.3%, which the company said was ahead of a soft pub restaurant market outside the M25.

AJ Bell Investment Director Russ Mould noted Whitbread's higher sales but said: "Investors were more concerned by the group’s warning that prices may have to rise to cover increased staff costs when the living wage comes into force.”

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