Costa Coffee owner posts 2.6% sales growth in Q1

Whitbread said underlying sales at its Costa Coffee chain recovered over the last three months and its Premier Inn hotel brand continued to grow, sending shares in the company 3% higher.

Costa reported underlying sales growth of 2.6% in the 13 weeks ended June 2, its financial first quarter, recovering from a disappointing 0.5% level it recorded in the 11 weeks to February 11.

It blamed that performance on a mild winter and fewer people on the high street.

In Whitbread’s Premier Inn hotel chain, underlying sales rose 2.1% despite industry data which the group said showed a soft hotel market in Britain and particularly London.

Those performances from its two biggest divisions, which together accounted for over 80% of group sales last year, put it on track to grow this year.

“Although it is early in our new financial year and despite current market conditions, with the benefit of our cost efficiency programme we remain confident of making good progress for the full year,” said chief executive Alison Brittain.

Shares rose 3.2% to 4,174p in initial trading yesterday, making it the top riser on Britain’s bluechip index.

Panmure analyst Anna Barnfather called the Costa performance a “positive surprise”, while Hargreaves Lansdown’s head of equity research Steve Clayton said the hotels result was a relief.

“With some analysts having made bearish calls on the outlook for the hotels business lately, the market took some reassurance from today’s statement,” he said.