Whitbread share price rallies even as group points to tougher market conditions

Investor urges Costa Coffee and Premier Inn owner to pursue break-up

Whitbread share price rallies even as group points to tougher market conditions

Shares in Whitbread (LON:WTB) have jumped in London this morning even as the company posted weak like-for-like sales growth in the UK due to tough market conditions. Investors, however, have instead focused on reports that an activist investor is pushing the blue-chip group to consider splitting the Costa Coffee chain from its hotels and restaurant businesses.

As of 09:55 GMT, Whitbread’s share price had added 1.92 percent to 3,929.00p. The Costa Coffee and Premier Inn owner’s stock is outperforming the benchmark FTSE 100 index which currently stands 0.30 percent lower at 7,702.55 points.

Whitbread posts Q3 results

Whitbread reported in a statement today that its total group sales had climbed 5.6 percent in the third quarter of its financial year. The group’s like-for-like sales in the UK, however, inched 0.3 percent higher reflecting recent tougher market conditions.

“We do expect the tough UK high street environment and inflation in our sector to continue to pose challenges in the year ahead,” Whitbread’s chief executive Alison Brittain cautioned in the statement, assuring investors, however, that the blue-chip group was on track to achieve its expectations for the full year.

Investor pushes for break-up

In a separate development, sources with knowledge of the matter told Reuters yesterday that activist investor Sachem Head had asked the company to consider a break-up as a way to boost the value of its individual businesses.

The US hedge fund disclosed a 3.4-percent stake in Whitbread last month, sending the shares rallying amid speculation the activist would push to split up the company. Earlier this year, Barclays hiked its valuation on the group after posing the question what if the blue chip leisure giant decided to sell Costa Coffee and its hotels real estate.

As of 10:09 GMT, Thursday, 18 January, Whitbread plc share price is 3,937.00p.

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