Whitbread’s hotel boss is checking out, the company announced alongside a positive trading update.
The company, the owner of Premier Inns, Brewers Fayre and Costa Coffee, said like for like sales rose 6% in the third quarter and it was confident of meeting full year expectations. Premier Inns sales grew 8.5%, hotels and restaurants rose 6.3% - as hotel boss Patrick Dempsey steps down after 10 years - while Costa’s sales climbed 5.2%.
It has opened 2,177 new Premier Inns rooms so far this year, including the first of its new Hub formats in Covent Garden. Dempsey will leave at the end of February, to be replaced by head of restaurants Paul Flaum.
Whitbread’s shares have dipped 2p to £45.67 after a strong recent run. Numis analyst Wyn Ellis said:
Trading has been strong through the first three quarters, aided by some special events such as Farnborough and the Commonwealth Games. Comparatives are tougher in the fourth quarter as relatively benign weather favoured Premier Inn and Restaurants last winter. We reiterate our add recommendation and increase our target price to 5,150p.
Jeffrey Harwood at Oriel was also positive:
This statement confirms that Whitbread is delivering further strong progress. With the organic opening programme for Premier Inn and Costa, we consider Whitbread is well placed to deliver double digit earnings growth. Against this background the premium rating looks fully justified and the shares remain a solid medium term investment.
Panmure Gordon said:
Following today’s update we increase our 2015 and 2016 pretax profit estimates by around 3% leaving Whitbread trading on a 2016 PE of 21.6 times and an enterprise value/EBITDA ratio of 12 times, yielding 1.8%. We increase our target price to 4582p (previously 4046p) and retain our hold recommendation with the stock fairly valued in our view.
