Whitbread share price slides as investors focus on cautious outlook

Shares in Whitbread (LON:WTB) have fallen into the red in London this morning, as the Premier Inn signalled that it does not expect to grow profit in the financial year ending February 2020. The update comes after the company recently wrapped up the sale of its Costa Coffee business to The Coca Cola Company.

As of 10:16 GMT, Whitbread’s share price had given up 1.22 percent to trade at 4,715.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.29 percent lower at 6,842.57 points. The group’s shares have added more than 22 percent to their value over the past year, as compared with about an 11.6-percent dip in the Footsie.

Whitbread updates on performance

Whitbread announced in a statement this morning that its total sales had grown 2.4 percent in the third quarter of the group’s financial year and 2.5 percent in the year-to-date. The company said that it had added 2,000 new rooms so far in financial year 2019, while occupancy remained high at 80 percent.

The Premier Inn owner, however, said that it remained cautious on UK next year given uncertainty and higher inflation, and that it expects to deliver underlying profit before tax in the February 2020 financial year consistent with the prior-year period.

Analysts weigh in on group’s update

Proactive Investors quoted Russ Mould, investment director at AJ Bell, as commenting that the flat profit raises whether “Whitbread shareholders will really want to stick around once they get their share of the proceeds from the sale of Costa”.

“They are left with a business that is lacking earnings momentum, at least in the short term,” he pointed out. The newswire also quoted George Salmon, equity analyst at Hargreaves Lansdown, as saying that the Costa sale meant that while the FTSE 100 group could focus entirely on its Premier Inn business, growth at the hotel business unfortunately ‘isn’t great just now’ and improving that trend ‘won’t be easy’.

As of 10:33 GMT, Thursday, 17 January, Whitbread plc share price is 4,715.00p.