The latest trading statement from Whitbread plc (LON:WTB) will have an added flavour given that the blue chip leisure firm has finally bowed to pressure from some shareholders to spin-off its Costa Coffee business.
Deutsche Bank is expecting the FTSE 100-listed firm’s first quarter update to be weak, reflecting recent trends in the UK hotels market and the tough market conditions hitting retail footfall.
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“However,” the German bank’s analysts said in a preview, “we believe efficiency savings (raised recently from £150mln to £250mln) provide some protection to consensus estimates. Still, recent corporate announcements including the Costa demerger would likely support the shares.”
The decision to hive off Costa Coffee came after activist investors Elliott Advisors and Sachem Head, which together control 10% of shares, urged Whitbread to split the business into two.
The growth of the coffee shops business has overshadowed the Premier Inn and restaurants business for years but concerns are growing that Costa has reached saturation point in the UK.
In the current financial year, the group has previously said it plans to open 4,000-4,500 Premier Inn rooms in the UK and Germany along with 230-250 net new Costa stores globally, and investors will be interested to see whether that level of expansion is still on the cards.
Slower revenue growth seen from Bunzl
A half-year trading statement from fellow blue-chip firm Bunzl PLC (LON:BNZL) may show a tapering off of revenue growth at the distribution and outsourcing group.
Bunzl’s group revenue in the first quarter increased by 7% year-on-year (yoy) at actual exchange rates and by 14% on a constant exchange rates basis, due to underlying growth of around 6% and an impact from acquisitions of about 8%.
“The underlying revenue growth, which is principally due to the additional grocery business won, albeit at lower margins, in North America towards the end of 2016, is expected to return to more normal levels during the remainder of the year as the additional business in North America has now been fully absorbed,” the group cautioned back in April.
That trading update contained news of two bolt-on acquisitions and it would not be a massive surprise were Bunzl to unveil another purchase or two.
Significant results expected on Wednesday June 27:
Trading updates: Whitbread PLC (LON:WTB), Bunzl PLC (LON:BNZL)
Finals: Great Eastern Energy Group Ltd (LON:GEEC), Liontrust Asset Management PLC (LON:LIO), Sysgroup PLC (LON:SYS) Tatton Asset Management Plc (LON:TAM), ULS Technology PLC (LON:ULS)
Economic data: CBI distributive trades survey; US durable goods orders, US pending home sales; US international trade in goods