megaloss
21 Jun 2017
Re: Update tomorrow Yes, pretty good results all considering.I had a Costa flat white while out shopping today - their coffee is still better than most of the other chains IMO, I'm feeling a bit better about it..
Uncle Doug
21 Jun 2017
Re: Update tomorrow Good progress. Improved sales in China - huge market to tap into there. LFL up in a nervous low wage growth economy. I'm staying put.
Hardboy
21 Jun 2017
Re: Update tomorrow Looks OK - better than expected & markets liked it. Good steady progress.
gamesinvestor
20 Jun 2017
Update tomorrow """Whitbread, the owner of Premier Inn hotels and Costa coffee shops, will provide an update on trading for its first quarter alongside its annual shareholder meeting.The company's fourth quarter numbers disappointed investors and analysts, with Costa like-for-like revenue decelerating to -0.8% but +0.6% on a comparable calendar basis against a tough high street retail backdrop.Premier Inn LFL revenue growth of 2.7% was an acceleration from the 2.2% for the first nine months, with London outperforming the regions.Deutsche Bank predicted Premier Inn margins should improve this year."Whitbread has made good progress with the £150m cost efficiency programme, which accounts for +220 bps in the Premier Inn margin (i.e. about £40m), helping to offset inflation and investments."We expect the Q1 trading update on 21 June 2017 to reassure the market and confirm that the trend is improving in Costa (compared to 4Q17), which has crystallised investors’ concerns."UBS forecast growth in revenue per available room (revpar) of 4%, marginally below the industry growth rate for the period of circa 5%, with Costa like-for-like sales growth of 1% and flat LFL for the FTSE 100 group's pub-restaurants."""
mike-c
20 Jun 2017
Re: Vampire Squid says Sell Yup, I'm out. Took a loss in last couple of years and can't see this coming good in the next. I too have visited a few Costs over last few months and many are looking tired and in need of a refresh in the offer. Especially the food. If you don't want over sugared pre-packed cakes often little to eat. Certainly very little healthy options.
gamesinvestor
19 Jun 2017
Vampire Squid says Sell [link] the owner of Premier Inn hotels and the Costa Coffee chain,due to provide a trading update, has already warned of the impact of a tougher consumer environment. Data from the ONS last week showed that wage growth slumped in April and inflation jumped 2.9pc in May.The FTSE 100 firm said changes to spending patterns had already started to feed through, when it published its full-year results in late April. Earlier this month, Goldman Sachs cut Whitbread’s rating to “sell” because of the more uncertain consumer outlook.Games - they also said oil would be $200 a barrel in 2016-17
Bill1703
14 Jun 2017
Re: Whitbread analysis "I do worry though that, should Costa feel the need to change its offer (which looks tired to me), there will be extra capex involved which would further reduce free cash, already under pressure from the hotels division."Megaloss - the feedback I hear, entirely anecdotal but from quite a few people, is that Costa remains the coffee house of choice for a good proportion. I don't spend a lot of time (or money) in coffee houses myself, but my one recent experience - in a metropolitan Costa (and not my choice) - was pretty positive. Perfectly good coffee and a very nice muffin!I suspect individual empirical experience will vary enormously from location to location, and on time of day, etc. I don't doubt that a good part of Costa's following comes down to locations - but there is a value in that in itself, of course.WTB is very cash generative overall - at the pre-discretionary capex level - and Costa in particular. And Costa's return in capital is massive at 45% latest FY (vs Hotels at 13%) - that was down 5 ppts YOY given higher investment, and may come down again, but the business is certainly generating very good cash returns, and I don't see too many constraints to continuing investment in both existing shops and new openings, at least for the moment. "So not without risk, but probably a hold for me at present at the current price."Yes, I certainly don't see WTB as an immediate 'value' situation - it's not particularly cheap, though it has been considerably more expensive in relatively recent times. But given that Costa and Premier Inn are two brands currently riding very high, I am happy for them to invest heavily in keeping them first-class - which in itself helps drive growth, in maximising the returns (and reducing the risk) in expansion via new coffee houses and hotels.With a chaotic political backdrop and fragile economic prospects, WTB will certainly be seen as vulnerable to downturn short to medium term. Time will tell just how cyclical the current business profile is - Costa should be reasonably defensive, and Premier Inn could well benefit from long-term-lower GBP (Costa too, for that matter), from both stay-at-home Sterling spenders, and overseas flocking to Britain 'cos it's cheap (and not so nasty, at least not everywhere!)
megaloss
14 Jun 2017
Re: Whitbread analysis Thanks for your views, Bill. I haven't sold my holding in spite of my question a few posts down the list. I do worry though that, should Costa feel the need to change its offer (which looks tired to me), there will be extra capex involved which would further reduce free cash, already under pressure from the hotels division. The pension deficit doesn't worry me too much.So not without risk, but probably a hold for me at present at the current price.
Bill1703
14 Jun 2017
Re: Whitbread analysis "The argument is that the current shareprice - circa 4000 is very much predicted on aggressive growth that is built into the price."Games et al - I have now been through Oakley's analysis, and to be fair, it's a solid enough piece of work - certainly thorough, balanced and with none of the kindergarten mistakes riddled through his work (sic) on VOD.His conclusions on returns, FCF, capex and the balance sheet all look pretty sound. He probably worries a bit more about the pension deficit and lease exposure than I do (inter alia, even including the pension deficit and heavy investment spend, ND/EBITDA is stable around 1.6x in recent times - a bit below the market average - and it remains a very cash generative business overall).But no real disagreement with the analysis. It is less clear what his investment recommendation was - probably a cautious HOLD, which has been the right view, even though the SP performance in recent times owes much to things he couldn't have foreseen back in late 2015, such as Brexit, the FX gyrations and the consequent downgrading of our economic prospects. WTB remains a largely cyclical business, albeit with a degree of defensiveness from the coffee business, and will likely trade as such for the duration.I note that this was written when the SP was nearer £45 than the current £40, and since then we've had 18 months of continuing decent (if not spectacular) progress - in the business performance, if not the SP. Even so, I wouldn't expect any more than £44-45 as 'fair value' as things stand, and I don't expect it to get there overnight.But I also note his 'break-up' valuation of more like £53... and I still think that break-up (or at least, a Costa spin-off) is the end-game here. Though more difficult to say when...So, still reasonably attractive for me at anything around the £40 level, both medium and longer term... as for the short term, who knows what next week will bring?!
Bill1703
14 Jun 2017
Re: Whitbread analysis "It's obviously open to interpretation, but Phil is a pretty thorough guy and has good analysis skills."Thanks Games, I will take a look... though things have moved on quite a bit from 2015!And I am very unconvinced by Oakley and his analysis skills... We did a detailed critique of his negative VOD piece on that board a few months back - a really shoddy, ham-fisted piece of work, making all the usual mistakes that people often make with VOD, if they rely on just a few raw numbers popping out of a third-party source, as Oakley does.And this was when we were back down around 190p, so of course, anyone following Oakley would have missed the subsequent (and predictable IMHO) recovery back above 230p (cum-divi). I might excuse Oakley, he clearly hasn't known or followed VOD historically, and as we know, the finances are complicated and idiosyncratic... but still, my experience suggests that people making basic mistakes with one stock are much more likely to make them elsewhere too.I understand that he has a bit of a following and a decent track record, though mostly with lesser-known smaller caps, I hear... But as for his analysis skills, if one of the analysts working for me came up with that stuff on VOD, they would be getting VERY short shrift!
gamesinvestor
13 Jun 2017
Re: Is Costa fit for purpose? "Just wondering whether I need to sell once it goes xd - any comments?"mega -- I couldn't personally recommend, as I'm a poor customer -- I tend to be in awe of all the young people who spend a fortune each week on coffee and snacks. When I was starting out I seem to remember it being a squeeze to meet the mortgage and all the other stuff.What's more surprising is the sheer number of coffee shops on the high streets - it seems almost every other shop is a coffee shop, looks saturated to me. Do people have nothing else to do?But I'd refer you to my last post and the analysis by Phil Oakley which goes into quite some detail.The rising rents in the hotel division is a concern for me and the pension position. In the coffee sector, it all seems too good to be true, despite the current high profit margin. Games -- I'm not a holder or a buyer, but I'm not sure I feel strongly enough to have a conviction one way or the other.
gamesinvestor
13 Jun 2017
Whitbread analysis late 2015, but most of the information is still very valid and it's well thought out.[link] argument is that the current shareprice - circa 4000 is very much predicted on aggressive growth that is built into the price.It's obviously open to interpretation, but Phil is a pretty thorough guy and has good analysis skills.Games
megaloss
17 May 2017
Is Costa fit for purpose? Amid all the broker analysis and other press, about WTB recently, I thought I'd pay a Costa a visit as it has been a while. I used to see Costa as a welcome (and much preferred) alternative to the execrable Starbucks and Nero, but based on my purely subjective and anecdotal visit this week, I see that absolutely nothing has changed in the Costa offer for quite a few years now,I do think the market place may have changed though and that Costa may be missing the boat by continuing to offer a really boring and on occasion inedible food offer. Compare the stale croissants and brownies with the deliciously inexpensive fare on offer at EAT (just down the road in this case) or even the bog-standard Pret and there's no contest IMO.I haven't road-tested Premier Inn recently but also their capital improvements programme must be finished by now and starting to age a bit, surely?Just wondering whether I need to sell once it goes xd - any comments?
Kool Keith
13 May 2017
Alison Brittain [link]
nk1999
28 Apr 2017
Credit Suisse From Citywire (on 26/04):"Buy cheap Whitbread, says Credit Suisse Costa and Premier Inn owner Whitbread (WTB) is trading at a cheap price compared to its historic average despite the investment case being on track, says Credit Suisse. Analyst Tim Ramskill retained his ‘outperform’ recommendation and target price of £45.50 on the stock following full-year 2017 results. It reported profit before tax of £565 million against Ramskill’s estimate of £570 million, and guidance for 2018 and the £150 million self-help plan are ‘on track’. But the shares fell 6.6% to £40.25 yesterday as investors took fright at falling sales at Costa and chief executive Alison Brittain’s warning of a ‘tougher consumer environment than last year’.‘We maintain a positive view on Whitbread given solid results, trading momentum and a reasonable valuation,’ said Ramskill. ‘We note Whitbread is cheap versus history, trading at a c.5% premium to the FTSE 250 versus a 20% premium over the last 10 years. Whitbread trades on a February 2018 estimate price earnings of 16.1x offering an adjusted free cashflow yield of 4.7%.’"
