Whitbread share price declines as annual performance improves but CEO steps down

Whitbread’s (LON:WTB) share price fell this morning after Britain’s largest hotel and coffee shop operator reported robust full-year results and improved long-term targets, while at the same time announcing the intended resignation of its chief executive Andy Harrison.

In the 12 month ended February 26, Whitbread’s revenue rose 13.7 percent to £2.61 billion and underlying profits before tax by 18.5 percent to £488.1 million, leading to a 19.4 percent increase in earnings to 213.67p per share — well ahead of consensus forecast. The group’s Premier Inn hotel chain grew total sales by 15.3 percent, while growth at Costa’s coffee shop operations soared to 17.9 percent. Whitbread further revealed that it would reward investors with a final dividend of 56.95p a share, making a total dividend for the year of 82.15p — an increase of 19.4 percent.
CEO Harrison said the company was “on track” to deliver the growth milestones for 2016 and 2018 and published new expansion targets. By 2020, Whitbread expects to have 75,000 Premier Inn rooms, almost 27 percent higher than the current 59,138, and to generate Costa system sales of £2 billion, which would be a 42 percent increase on last year’s £1.4 billion. The company said the achievement of these fresh targets would create around 15,000 additional jobs in the UK over the next five years.
Whitbread made a separate announcement today, concerning its CEO’s planned retirement by February 2016. Harrison has seen the company’s market capitalisation grow from £2.5 billion to almost £10 billion since joined in Sept 2010 from easyJet. He is due to become Chairman of FTSE 250-listed homewares retailer Dunelm on July 7. Whitbread Chairman Richard Baker is leading the hunt for the company’s next CEO, and will consider both external and internal candidates to fill the role.
Harrison was “instrumental in the creation and growth of Costa and Premier Inns, which are two of the U.K.’s favorite brands,” Stuart Gordon, an analyst at Berenberg, told Bloomberg in a phone interview this morning. “There will be nervousness among the investment community in the short-term.”
Reacting to Harrison’s planned resignation, investors sent Whitbread’s shares 1.58 percent lower to 5,354.10p by 09:39 BST. The FTSE 100-listed company has seen its stock value rising almost 13 percent since the beginning of the year.
As of 10:04 BST, Tuesday, 28 April, Whitbread plc share price is 5,350.00p.

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