Costa’s like-for-like sales grew 2% in the UK for the year to 2 March but there were signs of slowing spend on the high street in Q4.
Parent company Whitbread this morning reported its preliminary results for the full-year, which showed total sales up 8.2% to £3.1bn with underlying profit before tax up 6.2% to £565.2m.
Costa total sales grew 10.7% during the year qwith system sales up 12.7% and UK equity like-for-like sales up 2%.
In the fourth quarter Costa’s total sales were up 9% but like-for-like sales dropped 0.8%, which the company said was due to the timing of the quarter. It said that excluding the timings like-for-like growth in the fourth quarter was 0.6%.
The company said that sales in travel and Drive Thrus - which account for nearly 30% of future Costa store growth - continued to do very well in Q4 with high street stores like-for-like sales down just over 1%.
On the focus for the pipeline, the group said: “Future growth will also be underpinned through diversification of our channels and formats as we recognise that customer requirements differ by location. For example, our Pronto format is optimised to sell our hand-crafted coffee quickly in high footfall locations, such as travel hubs at peak times, taking advantage of the volume opportunity presented. Drive Thrus are also delivering very high sales volumes and returns and, together with travel channels, are our fastest growing category and will become a greater proportion of our estate going forward.”
During the year 255 net new Costa stores opened worldwide, of which 169 were in the UK.
Restaurants’ total sales grew by 1.2% in the year with like-for-like sales down 0.3%. Eight net new restaurants were opened during the year. In Q4 Restaurants’ total sales increased 2.2% with like-for-like sales down 0.7%.
For the year Premier Inn total sales were up 9%, and like-for-like sales up 2.3%. In Q4 total sales grew 9.3% and like-for-like sales were up 2.7%. Premier Inn opened 3,816 gross new UK rooms during the year
Total cash capital investment for 2016/17 was £609.8m. During the year, the group carried out a number of sale and leaseback transactions generating total in year proceeds of £186.2m.
Chief executive Alison Brittain said: “Whitbread has had another year of strong growth and continued investment with total Group sales increasing 8.2% to £3.1 billion and underlying basic earnings per share increasing by 6.0%, demonstrating the strength of our core brands. Total basic earnings per share increased by 7.3%.
“During the year we continued to strengthen our capabilities to support our long-term, growth, including developing the senior team with a number of new hires and promotions. In November we announced a £150 million cost efficiency programme to help offset investment and sector cost pressures. We have made good progress this year in areas such as procurement, supplier consolidation and labour scheduling, which has helped maintain margins.
“In the year ahead we will continue to focus on organic growth and investing in our customer proposition. This, together with our efficiency programme and disciplined capital management gives us confidence in delivering another year of good progress, in line with overall expectations. Whilst we are only seven weeks into our new financial year Premier Inn has had a good start to the year and Costa has also seen positive like for like sales growth, although we remain cautious and expect a tougher consumer environment than last year.”
Commenting on the results, Simon French of Cenkos said: “Overall these numbers will reassure the market and the outlook is pragmatic rather than overtly cautious.”