Costa Coffee owner Whitbread (WTB) is struggling to lure in people for their caffeine boost as UK like-for-like sales growth at its coffee chain fell to 0.6% in the six months to 31 August.

That represents a significant drop from 2.3% growth over the same period last year, suggesting people are tightening their purse strings due to higher inflation, which hit 3% in September.

The half year results were poorly received by the market on 24 October with the shares falling by nearly 5% to £37.51, reversing a rally in the weeks leading up to the figures.

Morgan Stanley analyst Jamie Rollo says the company actually beat consensus expectations of £318m underlying pre-tax profit by delivering £328m.

While like-for-like sales were weaker than expected at Costa and its Premier Inn hotels arm, Rollo argues this was offset by stronger sales from new openings and a better margin performance in the UK.

Canaccord Genuity analyst Nigel Parson flags opportunities in Germany for Premier Inn as it is 35% larger than the UK and in China for Costa thanks to the recent buyout of interests in Whitbread’s joint venture partner Yueda Costa. (LMJ)

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