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Whitbread's underlying revenue dips as provinces stay weak

In the 13 weeks to 28 November, total sales grew 1%, with a 1.3% UK LFL dip offset by 0.3% growth across all properties in UK and Ireland

Whitbread plc - Whitbread “cautious” as revenue inches up

Whitbread plc’s (LON:WTB) underlying revenues slipped again in its latest quarter as Premier Inn struggled outside London.

Total sales grew 1% in the 13 weeks to 28 November as Whitbread added a net 2,500 rooms but like-for-like sales dipped by 1.3% even with some growth in the food arm and a good showing in the Capital.

READ: Whitbread upgraded to ‘hold’ by Deutsche Bank in European hotels sector review

The hotelier said it is “difficult” to predict short-term performance, but pointed out every 1% movement in revenue per available room hits profit before tax by £12mln to £15mln.

Outside of the UK, the FTSE 100-listed group said Premier Inn's first German hotel in Frankfurt is “fully mature” and trading well while the new hotels in Munich and Hamburg are now open.

In the year to February 2021,Whitbread added that it will take a £60mln hit to net margins, consisting of £70mln inflation and £25mln invested in improving the offer, offset by £40mln saved through an efficiency programme.

“Despite the short-term economic uncertainty, there remains significant long-term opportunities for Premier Inn in both the UK and Germany,” said chief executive Alison Brittain.

Analysts said Brexit is still casting a dark cloud over the group despite a stronger post-election environment, while a higher National Living wage and higher utility costs are expected to weigh on margins.

The company's ability to navigate short-term uncertainty is "crucial", said Joe Healey, analyst at The Share Centre, adding there is hope based on a strong balance sheet.

"If international expansion continues on a positive trajectory and business confidence returns, there is no reason for investors not to be quietly optimistic," he said in an email.

Shares dropped 4% to 4,627.97p on Thursday morning.

--Adds analyst's comment, shares--

Quick facts: Whitbread PLC

Price: 3894 GBX

LSE:WTB
Market: LSE
Market Cap: £5.23 billion
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