Whitbread reports 3,000 new jobs created in past year: Whitbread has reported it has created 3,000 new jobs in the UK in the past year as it reported sales up 13.0% to £2,294.3 million (2012/13: £2,030.0 million) in the year to 27 February. Group like for like sales rose 4.2% and underlying profit before tax was up 16.5% to £411.8 million (2012/13: £353.4 million). Whitbread Hotels and Restaurants saw profits up 11.2% to £348.1 million and Costa profits rose 21.9% to £109.8 million. Premier Inn total sales were up 13.4% and like for like sales up 5.0%. Costa total sales grew 20.1% and like for like sales were up 5.7%. Profit after tax and exceptional items rose 10.7% to £323.4 million (2012/13: £292.1 million). Premier Inn now has 55,035 UK rooms, up 6.5% in the year with a committed pipeline of circa 11,500 rooms and Costa system sales increased by 19.4% to £1.2 billion. Chairman Anthony Habgood said: “This is another set of good results. Once again strong cash flow funded the necessary capital investment for our growth engines, Premier Inn and Costa, to increase their share of the market. We have recommended an increase in the full year dividend of 19.9% while maintaining a prudent balance sheet structure. I am confident that the brand strength of Premier Inn and Costa will continue to fuel the company’s growth into the future.” Chief executive Andy Harrison said: “Whitbread has delivered another year of strong double digit growth, with total sales up 13.0%, underlying pre tax profits up 16.5% and EPS up 20.1%. This, combined with our good cash flow, has led the Board to recommend a full year dividend increase of 19.9%. This extends our track record of double digit growth, with sales growing by 11.4% over the last five years and EPS and dividends per share growing by 14.7% and 13.5% respectively. This success is built on our two strong brands Premier Inn, the UK’s favourite hotel chain and Costa, the UK’s favourite coffee shop and our 43,000 team members who work so hard to deliver a consistently good customer experience. We continue to invest in improving our customer propositions and international expansion. This includes the rollout of our “best ever bed” in Premier Inn, the launch of “hub by Premier Inn” and rejuvenating our restaurant brands. In Costa we are focussed on international growth in China and France and our rebranding in Poland, together with the continuing growth of Costa Express. We had a strong finish to last year, with all our brands performing well, boosted by good Christmas and New Year campaigns and helpful weather comparatives. The first two months of the new financial year have started positively, with good trading again helped by relatively soft comparatives which will become tougher as we move into the second half of this year. We remain on track to deliver our 2016 and 2018 growth milestones for both Premier Inn and Costa which, combined with our clear focus on returns, will create substantial shareholder value.”

   

Whitbread – pub restaurants delivered better second half performance: Whitbread has reported that its pub restaurant delivered a better second half performance. It stated: “Restaurants delivered a much better second half performance, which increased sales growth for the full year to 3.9% and like for like sales growth to 1.6%, outperforming the Coffer Peach industry benchmark outside the M25. Contribution margin was flat as a result of the stronger second half performance. This was aided by very favourable weather comparatives and less promotional discounting. We are rejuvenating our Brewers Fayre and Beefeater brands. This includes investing in our food development, revitalising our menu offer, improving our branding and signage and delivering a more consistent guest experience. We have updated 33 of our Brewers Fayre restaurants and we plan to complete the rest of the estate in 2014/15, at an average investment of around £50,000 per restaurant. In Beefeater we have converted eight restaurants to our new format, with a further 20 conversions planned in 2014/15 at an average investment of around £200,000 per restaurant. The goal in our restaurants business is to “serve up great memories” for the 47 million guests who visit us each year and it is pleasing to see our guest scores improve by 3.2% pts to 66.1%.”

   

Douglas Jack – we expect strong sales and lower margins at Wetherspoon next Wednesday: Numis Securities leisure analyst Douglas Jack has forecast strong sales and lower margins when JD Wetherspoon reports Third Quarter results next Wednesday (7 May) – he has an add recommendation on the shares with a Target Price of 925p. He said: “Since January, JDW has faced LFL sales comps of 7%, unlike many of its peers, yet grew LFL sales by 6.7% in both Q2 and first six weeks of Q3. EBIT margins fell 16bps in H1 and guidance already allows for a 50bps decline over the full year (consensus -45bps). We expect to hold our forecasts after this update. Our ‘Add’ recommendation reflects strong forecast earnings growth in 2015E and assumes no further re-rating. Our forecasts are line with guidance for 8.2% margins over the full year, assuming an 83bps decline in H2. Net cost inflation is running at 3%, but investment in IT, repairs and labour has increased, with labour costs exacerbated by extended food trading hours, hence full year margin guidance is c.50bps down on last year. For next year, management believe October’s 2.9% increase in the National Minimum Wage can be absorbed. 40-50 new pubs should open this year, following 20 new openings during the first 32 weeks. 65% of sites should be freehold (vs. a 44% company average). As a consequence of this, faster expansion and a negative working capital movement, net debt should increase by circa £70m this year. Despite this, interest costs should fall from next year due to maturing swaps (2015E benefit: £5m). The shares are on a 17% EV/EBITDA premium relative to their historical average, whereas the sector premium has recently slipped to 7% (from 14%). Our 925p target price, equivalent to 16x P/E on 2015E’s earnings, assumes a slight de-rating over the next year. In our view, this is cautious given that growth prospects are improving due to reasonably benign cost pressure, improving consumer confidence, faster expansion and falling swap costs.”