The Courier & Advertiser (Perth and Perthshire Edition)
Mixed fortunes for giants of the UK high street
TradE: Primark and Costa owner report sales
Whitbread saw tough trading in the third quarter after serving up lacklustre sales growth across Costa Coffee and Premier Inn.
Costa’s UK like-for-like sales slipped 0.1% during the three-month period and growth at its hotel business was flat, with the group expecting difficult conditions on the British high street to continue.
Chief executive Alison Brittain said Costa’s UK cafés were “highly profitable”, but the “well-publicised weak retail market footfall” was harming its stores and would likely do so for some time to come.
On Premier Inn, she said there were signs of “market weakness”, with occupancy and average room rates dropping year-on-year.
However, total UK sales made for brighter reading, with Costa and Premier Inn expanding by 7.2% and 5%, respectively, for the three months.
Ms Brittain said the FTSE 100 firm was on track to hit its annual targets and shares moved ahead in early trading.
“We do expect the tough UK high street environment and inflation in our sector to continue to pose challenges in the year ahead, “she said.
“However, we have good momentum in the delivery of our plan to enhance our UK market leadership positions, create an international business of scale in Germany, China and Costa Express, and develop a more efficient infrastructure.”
Meanwhile, Primark owner Associated British Foods saw its shares fall early despite reporting record festive sales at the low-cost fashion chain.
The FTSE 100 group said Primark’s performance in the week before Christmas hit an all-time high, with sales lifting 7% in the 16 weeks to January 6 once exchange rate changes were stripped out.
Growth was underpinned by the robust UK market and an increase in retail space, helping the chain to shrug off unseasonably warm weather in October which pegged back European sales.
In a trading update the company said: “The UK continued to perform well with strong like-for-like sales, a consequent strong increase in share of the total market, and trading which reflected the breadth of our consumer offering.”
However, the firm endured tougher trading at its sugar business, with revenues dropping 12% at constant currency.