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Morning Briefing for pub, restaurant and food wervice operators

Thu 10th Dec 2015 - Whitbread reports like-for-likes up 3.5% in latest quarter
Whitbread reports like-for-likes up 3.5% in latest quarter: Whitbread has reported total sales grew 10.4% in the 13 weeks to 26 November and like-for-like sales grew by 3.5%. Premier Inn’s total sales grew by 10.8%, with a combination of 4.7% like-for-like sales growth and a 7.4% increase in rooms available with good total sales growth in both London, up 14.8%, and in the regions, up 9.7%. Total revpar was up 3.6% with occupancy remaining high at 84.5%. Restaurants like-for-like sales growth was 1.7%. Costa delivered total sales growth of 13.8% and like-for-like sales growth of 2.5% in a quarter that included a soft November. The company stated: “We are on track to deliver our growth milestones. This year we plan to open around 5,500 new Premier Inn rooms and around 200 net new Costa stores worldwide. Our committed UK hotel pipeline has grown to 14,588 rooms.” Chief executive Alison Brittain said: “I am delighted to have joined Whitbread as chief executive. This is a great business with a strong leadership team and 48,500 team members who are passionate about delivering outstanding customer service. In Costa and Premier Inn we have built the nation’s most loved coffee shop and hotel brands and we have laid out clear and ambitious growth milestones. I am looking forward to building on the foundations of the business by investing in our people, our network and our infrastructure to enhance our customer offer, further strengthen our brands and deliver profitable growth. Whitbread has had another good quarter and, for the year to date, we have delivered total sales growth of 11.1% and like-for-like sales growth of 3.6%. Our brands continue to win market share and we are on track to deliver full year results in line with market expectations.”

Hotels and Restaurants: The company stated: “Premier Inn has continued to win UK market share, growing total sales for the 39 weeks by 11.9%, like-for-like sales by 4.9%, total revpar by 4.2% and total room nights sold by 7.4% to 13.6 million. Total occupancy remained high at 84.0%, in line with last year, whilst the number of rooms available increased by 7.8%. In the quarter Premier Inn grew total sales by 10.8% and total revpar by 3.6%. Like-for-like sales growth of 4.7% was ahead of the like-for-like revpar growth of 3.1%, benefitting from our accelerated hotel extension programme. In London we grew total sales by 14.8% in the quarter, with a 13.6% increase in rooms available, total revpar growth of 2.1% and total occupancy up 0.6% pts to 89.2%. Total London market revpar grew by 5.4% and the midscale and economy sector grew total revpar by 4.5%. In the regions we grew total sales by 9.7% in the quarter, with a 3.3% increase in total revpar, a 6.5% increase in rooms available with total occupancy at 83.8%. Total regional market revpar grew by 5.7% and the midscale and economy sector grew total revpar by 6.9%.Restaurants delivered total sales growth of 2.0% and like-for-like sales growth of 0.6% for the 39 weeks, ahead of our competitor set.1,818 UK rooms were opened in the year to date and, for the full year, we plan to open around 5,500 UK rooms including c.1,500 extensions.”

Costa: The company stated: “Costa grew its worldwide total sales by 15.3% and like-for-like UK sales by 3.7% for the 39 weeks. Costa grew worldwide system sales by 14.1% to £1,165 million (14.3% at constant currency). Within this, franchise system sales grew by 11.3% to £443 million. UK Retail system sales, year to date, grew by 14.9% to £635 million with equity stores growing like-for-like sales by 3.7%. We opened 69 net new UK stores, including the opening of our 2,000th UK store. Costa Enterprises (including Costa Express UK and International) delivered system sales of £294 million, up 14.0%. Costa Express maintained its success with the installation of a further 687 Costa Express machines taking the total to 4,979. International system sales grew by 11.9% to £236 million (13.0% at constant currency). 37 net new stores were opened in the period with 25 in EMEI and 12 in Asia. In the year Costa plans to open around 200 net new stores worldwide and install over 800 net Costa Express machines.”

NewRiver Retail plans to raise £150m: Property company NewRiver Retail, which owns 359 pubs, is planning to raise £150m through a placing of shares at 325p to fund the company’s current transaction and development pipeline. It stated: “Over the six years since its IPO, NewRiver has been an active acquirer of retail and leisure property assets and has demonstrated its ability to deploy capital quickly and efficiently into assets which meet its investment criteria. NewRiver has grown from IPO to become one of the UK’s largest owner/managers of shopping centres. NewRiver also owns 22 retail warehouses, 14 high street assets and 359 pubs. NewRiver’s focus on the UK retail property market gives it a competitive advantage in sourcing opportunities within this space, many of which are sourced off market. The company continues to see a wide range of opportunities which meet its investment criteria and therefore has a strong pipeline of acquisition and development opportunities which it is anticipated that the placing proceeds, together with additional sources of finance where relevant, will be utilised to fund. The proceeds of the Placing will put the company in a position of strength when exploring acquisition opportunities. On 9 December 2015, the company completed the acquisition of two retail warehouse assets for a combined acquisition price of approximately £9 million, representing an average net initial yield of 8.2%. The assets are located in Daventry and York and in aggregate provide approximately 48,000 sq ft of retail area. Together the properties complement the existing retail warehouse portfolio and provide asset management opportunities through enhanced rental base and development opportunities. NewRiver has also agreed heads of terms and is engaged in due diligence on two potential acquisitions which have a combined acquisition price in the region of £100 million. The first of these potential acquisitions is a portfolio of three regional shopping centres which have a total area of approximately 750,000 sq ft. The portfolio is well let, with 97%. occupancy and a low average rent. Additionally, it provides the opportunity to realise capital and income growth through active asset management, together with risk controlled reconfiguration and development options. The second potential acquisition for which NewRiver has agreed heads of terms is for a shopping centre in a strong London suburb. The centre offers excellent prospects for rental growth through active asset management, tenant engineering and good retailer demand. There may also be an opportunity for risk controlled extension and residential development above the shopping centre. Since the company’s Interim Results were announced on 18 November 2015, NewRiver has completed three disposals for a total cash consideration of £31.9 million generating a total profit of £5.6 million. The profit attributable to those assets in the 12 months prior to disposal was circa £0.5 million. The three disposals were Regent Court, Leamington Spa; Ferensway, Hull; and the Railway Hotel pub in Wigan. In line with the company’s business model, the proceeds will be recycled into future transactions and the company’s development pipeline.” David Lockhart, chief executive of NewRiver said: “NewRiver has enjoyed significant progress in recent years, delivering strong shareholder returns by deploying its highly regarded active asset management and risk-controlled development skills. The ability to grow the asset base through highly selective acquisitions is fundamental to the future growth of the company and we have identified a significant pipeline of new opportunities that we believe will deliver long term above-market returns to shareholders.”

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