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Leisure/Retail: Growth at Costa and Premier Inn drives 16.5% surge in profits at Whitbread

08:37 29 April 2014

Profits at coffee chain Costa have increased by nearly 22% over the past year.

Profits at coffee chain Costa have increased by nearly 22% over the past year.

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Britain’s burgeoning coffee shop culture has helped the Costa chain grow annual profits by more than a fifth as sales and store numbers surged.

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The chain sold 400 million drinks in the year to February 27 as revenues rose by 21.9% to £807.7million, during a period when 177 new outlets were opened to take the total number in the UK to 1,755.

Costa’s domestic like-for-like sales were up 5.7% and underlying operating profits grew 21.9% to £109.8m while worldwide sales of £1.2billion were on track to reach a target of £2bn by 2018, owner Whitbread said.

Finance director Nicholas Cadbury said Costa was “continuing to benefit from the socio-economic changes favouring coffee shops”.

The performance helped Whitbread to a better-than-expected 16.5% surge in underlying pre-tax profits to £411.8m, on revenues of £2.29bn.

It was also helped by the performance over the final quarter of its UK hotels and restaurants Premier Inn, Brewers Fayre and Beefeater.

Successful Christmas and New Year campaigns combined with better January and February weather helped them achieve like-for-like sales growth of 7.3% in the final three months of the financial year, compared with 2.7% in the previous quarters.

Meanwhile, online hotel reservations as a proportion of total bookings grew to 85%. Plans to expand the number of rooms to 75,000 by 2018 include more than doubling those in London to 20,000.

Premier Inn revenues for the year were £967.9m, with like-for-like sales climbing 5%. Restaurants turnover climbed to £526.1m, with a like-for-like rise of 1.6%, though this was lower than the year before.

Whitbread said it was increasing its full-year dividend by 19.9%. The group, which employs 43,000 people, said it added 3,000 new net jobs in the year.

Chief executive Andy Harrison said: “We had a strong finish to last year, with all our brands performing well, boosted by good Christmas and New Year campaigns and helpful weather comparatives.

“The first two months of the new financial year have started positively, with good trading again helped by relatively soft comparatives which will become tougher as we move into the second half of this year.”

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