Eyes on signs of progress at Whitbread amid restructuring
The Premier Inn owner will unveil the current state of trading in an update to the market on Wednesday.
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Your support makes all the difference.Investors will be hoping hotel and pub owner Whitbread can reveal strong progress in a trading update next week amid a recent restructuring and tough market conditions.
Shares in the FTSE 100 group have sagged over the past year as pressure on customer finances has impacted spending on hotel visits and eating out.
The company will unveil the current state of trading in an update to the market on Wednesday.
In its previous update, the Premier Inn owner said total group sales increased by 1% to £739 million for the three months to May 30.
However, it indicated that were 1% down year on year over the first seven weeks of the second quarter.
Demand in the quarter, from the start of June until the end of August, will have also been impacted by continued weak weather conditions.
The company did highlight in its previous update that accommodation demand had recovered to move in line with the previous year.
Analysts at Bernstein have indicated revenues per available room are likely to have improve from a 2% decline in the first quarter to just a 0.4% drop in the latest quarter.
Deutsche Bank analysts have meanwhile suggested the company could report a “solid” first-half but are facing a “red October”, with industry data pointing to below-par consumer spending.
Sector research by CGA and RSM also found modest year-on-year sales growth over the summer.
Sales increased in both July and August across hospitality venues including pubs and restaurants, but this growth was below the rate of inflation in both months, pointing to weaker activity from Britons.
In April, the group – which also owns the Beefeater and Brewer’s Fayre brands – revealed a shake-up at its food and beverage division, due to weak performances among some brands.
It said it would cut its branded restaurants by more than 200 in favour of building more hotel rooms, leading to 1,500 job cut.
It outlined plans to sell 126 of its less profitable branded restaurants and convert another 112 into hotel rooms.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “A restructuring drive is underway to cut costs and refocus the business on hotels with integrated restaurants, and investors will want to see more progress on this.
“There were signs of a recovery at the end of the quarter, and management appeared confident that business will pick up as the year goes on.”