A leading analyst has said that expect a slowdown in Whitbread’s second quarter like-for-like sales growth to +1% due to the poor weather, calendar shifts, the Olympics, and tougher comps.
Jamie Rollo at Morgan Stanley, said: “Though Q2 is unlikely to be a positive catalyst, we think FY consensus forecasts are too low, and the shares still look good value. We forecast group like-for-like sales of +1%, with Premier Inn 0%, Costa +2% and Restaurants +1%. A slowdown from Q1’s +4.5% was well flagged by the company at its last results and we think most investors are expecting it.”
Rollo said that he exoected Costa’s UK LfL sales to be ahead by 2% in Q2, a sharp slowdown from the +8.5% in Q1.
He said: “Costa faces much tougher comps (+4% Q1F12 vs. +9.5% Q2F12) this quarter, though the poor weather may have been helpful in selling hot drinks even if it had a negative impact on high street sales. Our F13 forecasts assume LfL sales growth of just +3%, so LfL sales only have to be +1% Q2-Q4 to meet our forecasts.
“Every 1% is c.£3m to EBIT. The company expects to open 350 new outlets this year and 1000 Costa Express machines, and we estimate new openings last year and this will contribute c. £10-15m to F13 EBIT.
Across the group’s pub restaurant sector, the analyst expects LfL sales of +1%, below the +2% in the last quarter.
He said: “Trading for other pub restaurants has been up moderately in June despite the poor weather. The Coffer Peach tracker, which tracks LfL sales at pub restaurants, showed a 1% improvement in June. Whitbread launched a number of initiatives last year to close the sales gap with its competitors, so we expect the company to at least trade in-line with the market. For FY13 we forecast +1.5% LfL growth, and every 1% is c. £3m to EBIT.
“With £25-35m of F13 profit growth to come from new openings last year and this, we think consensus PBT of c.£340m (vs MSe £348m) is conservative (vs £320m last year). We effectively assume zero LfL profit growth, with 1.5-2.0% LfL sales growth offset by cost inflation. Consensus assumes negative LfL profit growth.”
