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Wed 27th Jun 2018 - Update: Whitbread Q1, Inn Collection finance, CO2 shortage, Just Eat
Whitbread sales up but like-for-likes down in First Quarter: Whitbread has reported group total sales growth of 3.2% in the UK but like-for-like sales down 1.3% in its First Quarter. Accommodation like-for-likes dropped 0.3%, food and beverage like-for-like were minus 1.9% and Costa like-for-likes dropped 2%. Alison Brittain, Whitbread chief executive, said: “Whitbread has started the year growing total group sales by 3.2%. We expect to deliver in-line with expectations for the full year and we continue to make strong progress on our efficiency programme. Premier Inn UK delivered total accommodation sales growth of 4.3% driven by additional capacity. The hotel market was weaker in the first quarter due to strong comparable data this time last year and increased supply, including significant room openings from Premier Inn. Our new capacity has a short-term impact on like-for-likes but delivers good long-term sales growth. Forward bookings have improved recently, supported by the robust business to business market and comparatives ease later in the year. Our F&B sales declined slightly due to lower footfall from adverse weather. Costa UK grew total sales by 5.2% in the quarter through the strong contribution from new stores and Express machines. We continue to actively rebalance our network to high-footfall and convenient locations and have made good progress with our product innovation and operational initiatives. Our stores remain highly profitable and deliver an excellent return on capital. Costa Express continues to perform well and like-for-like sales in China are growing. Both the budget hotel market and the coffee market present long-term structural growth opportunities, and whilst we are cautious of shorter-term trading conditions in the UK, due to well-publicised consumer trends, we are confident that we have the right strategies in place to enhance our UK and international market positions and ensure each business is well-positioned to thrive as a separate entity.” In April 2018, Whitbread committed to demerge Costa from Whitbread as fast as practical and appropriate to optimise value for shareholders. Constructive early steps have been taken in preparation for the demerger and good progress continues to be made on the core infrastructure and efficiency work that was already underway. A further update on the demerger will be provided alongside the interim results in October 2018.

OakNorth provides Inn Collection with debt finance to expand: OakNorth, the bank for entrepreneurs, by entrepreneurs, has provided The Inn Collection Group – which has seven sites across Northumberland, County Durham and Teesside an was acquired by Alchemy Partners last week – with finance to fund their expansion. Established in 2006, The Inn Collection Group has become a market leader in developing contemporary inns providing accommodation, food and drink to leisure and business customers. It currently has 215 rooms across its seven sites, but plans to increase this to almost 300 by 2020 with the OakNorth lending. In addition to opening an eighth inn later this year – a 30-bedroom inn in Amble, Northumberland – the business has added another 13 rooms to The Bamburgh Castle Inn, The Annex, and has refurbished the Seaton Lane Inn that has recently reopened. The group’s growth map also includes the addition of 29 new rooms at its popular Durham city centre operation, The Kingslodge Inn. The Inn Collection Group’s managing director Sean Donkin, said: “Over the last half decade, we’ve embarked on a ‘buy and build’ growth strategy that has seen us become one of the largest private providers of accommodation in north east England. Over the next three years, we will continue to develop and seek out new premises, focusing on sites that fit with our philosophy and the continual evolution of our group, offering high-quality accommodation at value for money prices. Raising funds from OakNorth will pave the way for us to drive these growth plans and focus on the immediate expansion of our pubs with rooms model.” Stuart Blair, debt finance director at OakNorth, said: “The UK’s hotel industry has seen annual growth of three percent for the last five years, boosted by major events such as the London Olympics, the Royal Wedding, and the Rugby World Cup. The Great Exhibition of the North which is currently underway is expected to give the region’s tourism a further boost, attracting approximately three million people and one million from across the UK. The management team at The Inn Collection Group is in a prime position to take advantage of this – we were impressed by their business model, the operational experience of Sean, Keith Liddell and the wider team, as well as the quality of each site. The team have a plan to grow the group by expanding into new sites and locations, and we look forward to working with them to support this.”

CO2 shortage starts to bite: Wholesaler Booker is rationing beer and cider because of a shortage of CO2 used in carbonated drinks – the retailer is limiting customers to ten cases of beer, and five of cider or soft drinks. Booker said in a statement: “Due to the international shortage of CO2, we are experiencing some supply issues on soft drinks and beer. We are currently working hard with our suppliers to minimise the impact for our customers and cannot comment further at this stage.” CO2 producers in the UK and mainland Europe have scaled back operations for maintenance, causing a shortage of the gas, whose many uses include improving the shelf life of packaged food and creating dry ice to keep products cool during transport. Heineken said its John Smith’s Extra Smooth and Amstel brands had been hit, while Coca-Cola Great Britain said production had been interrupted until fresh CO2 supplies arrived. “We are currently responding to an industry-wide issue that is impacting the supply of CO2 in the UK. Our focus is on limiting the effect this may have on the availability of our products,” Coca-Cola said. Small UK bottling firms have also been hit. In the West Midlands, Holden’s, which has 80 customers, shut down last Friday until further notice. “I’m left with people sitting around doing nothing,” said operations director Mark Hammond.
Just Eat to set out strategic priorities at Capital Markets Day: Just Eat, the global marketplace for takeaway food delivery, is hosting a Capital Markets Day for institutional investors and analysts this morning at 9am. The event will be hosted by Mike Evans, chairman, Peter Plumb, chief executive, and Paul Harrison, chief financial officer, and will provide details on Just Eat’s three key strategic priorities, being: 1. Build our marketplace to be world-class; 2. Engineer delivery services to complement our marketplace; and 3. Lead a world-class digital global team, supporting extraordinary local customer experts. We will also discuss current operations and include presentations from a number of Just Eat’s executives and country managers.

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