Whitbread sales up at all businesses; targets top end of FY expectations UPDATE

Whitbread sales up at all businesses; targets top end of FY expectations UPDATE

	Published : Wed, 28 Feb 2007 11:28 By : Agencies Print this Story

(Adds chief executive, finance director comment)

LONDON (AFX) - Leisure group Whitbread PLC said total sales for continuing operations for the 50 weeks to Feb 15 were up 10.3 pct, or 4.3 pct on a like-for-like basis, as it posted increases for all its divisions.

The group said trading has strengthened throughout the year and that it expects full-year numbers to be at the top end of market expectations.

It said total sales at hotels arm Premier Travel Inn were up 16.5 pct for the year to date, or 8.1 pct on a like-for-like basis. The London market performed particularly strongly, it said, with RevPAR (revenue per available room) up some 15-20 pct in the capital.

The group said by year-end it will achieve its target of 2,500 new rooms, including 19 new hotels.

In a conference call this morning, chief executive Alan Parker said the group is upping its target to 3,000 new rooms for the 2007-08 financial year, with approximately 2,000 rooms coming from 30-40 new build hotels, including bolt-ons to existing pub restaurant sites, around 10 stand-alone Solus hotels and 10 new pub restaurants with attached Premier Travel Inns. The remaining 1,000 rooms will come from extensions to existing budget hotels.

He added the company will be reviewing its new room target going forward but said 'it will be at least 3,000 [a year] and maybe increasing'.

Parker also re-iterated the group's objective of 5,000 rooms in the Middle East with partner Emirates group by 2010.

Whitbread said pub restaurants division saw growth turn positive, with total sales up 2.6 pct and like-for-like sales up 0.7 pct as a result of an extensive remodelling programme.

It said it continues to see sustained average sales uplifts of around 25 pct at revamped sites. To date, however, the group has remodelled just 19 of its 266 Brewers Fayre pub restaurants, falling short of the 43 it had planned in the full year. Parker said the company is still 'determining the brand strategy going forward'.

'Within that 19 there are two or three different formats or styles and we are just re-evaluating the success of the 19,' he said.

The group intends to remodel around 100 Brewers Fayre pubs in 2007-08, though Parker said the Beefeater performance is very similar to the that of Brewers Fayre and added there 'could be some segmenting of the estate and some could move between Beefeater and Brewers Fayre'.

The David Lloyd racket sports chain recorded a total sales increase of 6 pct, with like-for-like sales up 2.7 pct. Parker said the two-year turnaround programme is due to finish this summer, with the clubs 'building up a momentum of positive growth'.

Costa saw total sales increase 22.1 pct as a result of an aggressive opening plan, with like-for-like sales up 6.7 pct.

Meanwhile, finance director Chris Rogers reiterated the company's aim to complete a review of its capital structure by the end of the first half of 2007.

'If we are reviewing the appropriate capital structure we need to consider all aspects from bank borrowing through to bonds to capital markets through to using our property and at this stage we are ruling nothing in and nothing out,' he said.

He also addressed Starwood Capital's interest of around 3 pct in the group, but stressed Whitbread had held no discussions with the private equity group regarding its intentions.

'That is a holding that has been pretty constant and stable for some considerable period,' he said. 'I think it has been a good investment for them.'

Shares in the company have climbed some 12 pct since Starwood's stakebuilding emerged, with the Reuben brothers also believed to have taken a 8 pct stake in the business at the end of January.

Parker said the company 'has to live with a certain amount of interest', but added: 'I don't think it's distracting us at all. I think the share price will be what the market determines it to be.'

At 9.30 am shares were down 16 pence at 1,615 pence, with Whitbread outperforming the declining market.

Restating its 'hold' recommendation, Dresdner Kleinwort called it a have ry solid' trading update and noted the accelerating like-for-like sales in the fourth quarter at Premier Travel Inn, pub restaurants and Costa.

It added catalysts are more trading driven, but said the group could return a further 500 mln stg to shareholders when it reports its full year in April.

ABN AMRO expects a further capital return of 400-480 mln stg to be announced in April. It also expects the group will revalue its freehold asset base to 3.7 bln stg, up from the 1999 valuation of 2 bln stg.

simon.meads@thomson.com

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