Costa and Premier Inn owner Whitbread (LON:WTB) released their third quarter trading update on Thursday, recording strong sales growth despite warning that the environment would be “tough” in the coming year.

The group reported a total sales growth of 6.8 percent in the year to date, and confirmed it was on track to meet full year expectations.

Their hotel chain, Premier Inn, achieved total hotel sales growth of 5.5 percent in the quarter after investment in new hotel capacity, despite weak performance in the third quarter and a lack of demand in London. This was reflected in a flat like-for-like sales figure for the hotels during those three months.

Its coffee chain, Costa, has continued to deliver strong results, with a total sales growth of 7.2 percent. in the quarter. However the markets have reacted badly to its like-for-like sales figure, which fell 1.5 percent in the 13 weeks to 30th November, and could account for why Whitbread shares are currently trading in the red.

 

The group confirmed that business at its High Street cafes has declined and is likely to remain “subdued”, with Alison Brittain, Whitbread’s CEO, saying that the group “expects the tough UK high street environment and inflation in our sector to continue to pose challenges in the year ahead.”

However she added, “we have good momentum in the delivery of our plan to enhance our UK market leadership positions, create an international business of scale in Germany, China and Costa Express, and develop a more efficient infrastructure.”

Shares in Whitbread are currently down marginally, at 3,853.00 (0815GMT).