Costa Coffee chain’s profits go cold

Costa has reported a fall in profits and a slowdown in sales at its existing coffee shops in the last six months.

Pre-tax profits at Costa slid 10% to £59m, with the UK's biggest coffee chain saying it was partly due to more expensive coffee imports.

However, the firm's owner, Whitbread, saw group profits rise thanks to growth from its Premier Inn hotel business.

Whitbread boss Alison Brittain said consumer confidence had "softened" slightly on the High Street.

She also said that Costa had no plans to put up its coffee prices, despite seeing rising costs.

The fall in sterling means the coffee that Costa imports - which is priced in dollars - has become more expensive, Ms Brittain said.

"There's a lot of cost pressure in the business, whether that be wages, rates, rents, inflation, which we've offset with efficiency gains," she added.

The company also pointed to investment in stores and the closure of its French business for the decline in statutory profit.

Costa's revenues in the UK increased by 8% in the six months to 31 August, but that was largely driven by the addition of 108 new stores.

Its like-for-like sales - which measures growth among existing outlets - increased by only 0.6%, down from 2.3% growth in the same period last year.

The chain hopes that what it calls the "third wave of coffee" will help to boost sales.

It described this as a period in which UK "consumers' preferences for coffee become more sophisticated and are willing to spend more per cup".