Whitbread profits perked up by rising Costa sales

Costa is seeking to tap into the market for 'finer' coffee. Picture: Julie Bull
Costa is seeking to tap into the market for 'finer' coffee. Picture: Julie Bull
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Costa Coffee owner Whitbread today reported a rise in half-year profits as it brews up plans to tap the artisan coffee market.

The group, which also owns the Premier Inn hotel chain, said underlying pre-tax profits for the six months to 1 September rose 5.4 per cent to £307 million, on revenues 8.1 per cent higher at to £1.6 billion.

Like-for-like sales at Costa were up 2.3 per cent in the period, while Premier Inn saw a comparable sales increase of 2.4 per cent.

READ MORE: Costa counts cost of warm winter weather

Whitbread chief executive Alison Brittain said: “We are trialling new ‘finer’ coffee concepts, introducing a new fresher food range and making good progress rolling out our Costa Pronto and Drive Thru formats.”

Costa opened its first “finer coffee” concept store in London’s Covent Garden in June, which sells artisan coffee and an “enhanced beverage range”. A second store opened in Wandsworth, south-west London, this month.

However, Whitbread added that it will closely monitor the risk of a “wider macro-economic effect as a result of the UK leaving the EU, including foreign exchange and interest rate fluctuations”.

Brittain said that despite “uncertainty in the UK’s economic outlook, the group expects to deliver in line with full-year expectations”.

The interim dividend, to be paid on 16 December, was lifted 4.9 per cent to 29.9p a share.

However, shares fell in early trading as fears of cost pressures weighed on investors’ minds.

Neil Wilson, markets analyst at ETX Capital, said: “Concerns about growth prospects and cost pressures means the stock is leading the fallers on the FTSE 100 this morning.

“Not only is the pound weak, but coffee prices have reached their highest level in two years, which will pile pressure on Costa to raise prices to defend margins. Coffee is priced in dollars, so any increase in prices is magnified when the pound is so weak.”

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