Shares in leisure group Whitbread are down after its latest trading update noted difficult economic conditions.
Shares in the UK's largest hotel and restaurant group has dropped 1.5%, or 25p, to £16.95 despite the company's assertion that it had "delivered good total sales growth" of 11.0% for the 50 weeks to 16 February. It adds: "We expect to report in April another full year of double digit earnings growth, in line with expectations" but the market appears to have been hoping for more.
The operator of Premier Inn hotels notes that industry data has continued to show a "soft" hotel market in the UK, with a "divergence in performance between London and the regions". It seeks to reassure investors that Premier Inn has "outperformed its competitive set" and that it is continuing with a strategy of winning share of the hotel market.
Turning to its restaurant business, which includes the Beefeater and Brewers Fayre chains, Whitbread concedes performance this Christmas was flattered by comparison with a 2010 festive season hit by snow.
The coffee bar chain Costa continues to be the company's star performer and it characterises the results for the year just gone as excellent, with total sales increasing by 25%, "driven by good like-for-like sales growth and record new store openings of 359 stores". That includes 71 new stores in China, taking its presence there to 163 stores.
Whitbread was one of 35 stocks tipped as a candidate for a takeover approach in a note on possible merger activity from Nomura's strategists on Monday.
Analysts at Panmure reiterate their hold recommendation on the shares but reduce their price target from £18.00 to £17.68. Although Whitbread itself expects to report full-year results in line with expectations of circa £315m profit before tax, they think consensus expectations of £337m PBT for 2013 will come under downward pressure.
