Whitbread, one of the few consumer businesses to thrive during the economic downturn, has shocked investors by admitting the hotels, pubs and coffee shop group has finally caught the chill affecting the rest of the high street.
Shares in the company slipped by almost 4% to £15.14 on Tuesday as the Costa Coffee, Premier Inn and Beefeater owner said that growth had slowed in the 13 weeks to 1 December, with like-for-like sales up 2.4% compared to a 3% rise across the last three quarters.
Despite the blip, the chief executive, Andy Harrison, immediately signalled his confidence in the company's prospects by splashing out £200,000 to increase the value of his stake to £2.9m. He
commented: "As we said at the half year, trading month by month continues to be variable in a challenging consumer environment. Within the total hotel market, industry data shows that revpar [revenue per room] growth in London and the provinces has virtually disappeared, with the London market showing broadly flat revpar and the provinces a marginal decline over the last six weeks".
Whitbread had appeared immune from the suffering elsewhere in the UK economy.
It has consistently reported encouraging numbers at Costa, which it bills as an "affordable treat", and at Premier Inn, the budget hotel chain which leisure analysts believe will benefit from squeezed consumers and businesses looking for cheaper deals.
Analysts at Shore Capital agreed with Harrison that the shares are a buy – but still downgraded their pre-tax profit estimates for 2013 by 3% to £336m, to reflect "the difficult trading environment in the UK".
Meanwhile, Evolution Securities analyst Nigel Parson observed: "Slowing like-for-like sales may prompt [the shares to fall because of] profit-taking but we would use this potential opportunity to pick up stock. Whitbread's clear value propositions resonate strongly with customers and its strong balance sheet allows it to continue to grow at the expense of weaker competitors."
In total, sales rose by 11.4% in the third quarter, with Costa growing revenues by 25.2% and Premier Inn by 8.3%.
The statement marks the first piece of bad news delivered by Harrison since the former boss of budget airline easyJet succeeded Alan Parker as chief executive in November. The group is on track to open 4,000 new rooms and 300 Costa cafés during the year, creating some 2,500 new jobs.