30 April 2024
If you are covering Whitbread’s latest financial results, please find below a comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
“Whitbread delivered full year results that were slightly behind on what the market expected. However, the key focus of the results today will be on Whitbread’s current trading and the group’s Accelerated Growth Plans.
“Like its full year results, current trading to the middle of April has been weak, like much of the industry has been experiencing. Accommodation sales were down 1%, and just like Hilton was last week much of this is being put down to the timing of public holidays. The business remains optimistic that trading will accelerate in the coming weeks supporting by a strong forward booking for May and June.
“Its UK Food & Beverage sales were down 2% as strong performance across hotel restaurants was offset by weakness across branded restaurants. However, Whitbread sees this as potential source of growth and has announced a new Accelerated Growth Plan, with a focus on converting 112 low-returning branded restaurants into new hotels in high-demand locations where supply remains short.
“The new plan will come at a cost, so profit expectations are being cut, although this should recover in a couple of years. This seems to make sense and a lower-risk solution to tackling low-performing restaurants and opening new/higher-return rooms in a rather efficient manner. Despite the investment, there is enough cash (£200m) in the business as the group announced a buyback worth 2.6% of market cap.
“We would expect management to provide some reassurance on the new plan at the call, but signs look good should they be able to pull it off.”
