Whitbread targets £150m of savings to counter rising costs
Whitbread has set out a target to make £150m of cost savings over the next five years in order to counter headwinds such as the National Living Wage, business rates and currency inflation.
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Profits margin guidance remained unchanged as new chief executive Alison Brittain is planning to invest in infrastructure, products and the Premier Inn and Costa Coffee brands.
"With the support of our efficiency programme and organic growth we expect margins to stabilise through to 2019/20 and increase thereafter," the FTSE 100 company said.
Hosting an investor day in London on Tuesday, Brittain outlined how the mix of efficiencies and investment would underpin the structural growth opportunities she saw for both brands, as well as firming up expansion targets.
These included extending the growth potential for Premier Inn from its current milestone target for 2020 of 85,000 rooms to "beyond 100,000" UK rooms.
For Costa the current plan has been to grow to around 2,500 stores by 2020, while now the company said it saw potential for over 3,000 stores.
Brittain said the Costa Express format would be doubled via expansion both in the UK and internationally, with the aim of generating roughly £25-30m of profits from international markets in the fifth year of the plan as well as "unlocking the huge potential in China with a clear plan to establish the number two position".
"Whitbread PLC is a great company with a strong pipeline of new growth opportunities in both of its core businesses," Brittain said. "We have business models and expertise that differentiate us, market leading brands that are loved by our loyal customers, a disciplined approach to financial management and a property strategy which provides real competitive advantage. As a result of these strong fundamentals, we expect to be able to deliver continued organic growth, maintain good return on capital and create long-term value for our shareholders."