Business

Britain’s high street woes dent sales at Costa Coffee

Whitbread-owned chain seen as likely sale target

Costa has been valued by some at £3 billion. Photograph: Reuters

Wed Jun 27 2018 - 17:19

Whitbread has said sales at Costa Coffee were dented in the first quarter by Britain's high street woes, adding that it is making "good progress" in preparing for the chain to be demerged.

Comparable sales at Costa fell by 2 per cent in the UK in the period, dragging down group like-for-like figures at Whitbread, which came in 1.3 per cent lower.

Total sales at Whitbread, including Irish sales, rose 3.2 per cent, and 4.9 per cent at Costa. Revenue at Whitbread’s hotels chain, Premier Inn, was up 2.2 per cent over the quarter.The group did not break out its Irish performance.

Chief executive Alison Brittain said: "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."

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Costa outlets at locations such as train stations and airports are growing.

The coffee shop to hotels firm said earlier this year that it will split the Costa chain and list it as a separate entity, following pressure from activist investor Elliott.

Demerger progress

“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 under way,” Whitbread added.

But it has since emerged that Costa is being circled by a clutch of private equity firms, opening the door to a potential £3 billion (€3.4 billion) sale of the high street chain.

Costa, which Whitbread acquired in 1995 from founders Sergio and Bruno Costa, has more than 2,400 outlets and is embarking on overseas expansion.

Under the de-merger plan, Premier Inn would stay with the group. – PA

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