TIDMWTB
RNS Number : 6438Z
Whitbread PLC
22 September 2020
Whitbread
22 September 2020
FY21 H1 post close and operational review update
Trading:
-- H1 total sales were significantly down year-on-year
reflecting the closure of the vast majority of our hotels and
restaurants for a large part of the period
-- When able, hotels and restaurants reopened quickly and
safely, with the majority of the estate in the UK open by the start
of August, and 98% of hotels open by the end of H1
-- Since reopening, UK accommodation sales performance has been
ahead of the market, benefitting from the fast reopening, the
strength of the Premier Inn brand and our leading customer
proposition. We have seen strong demand in tourist locations, while
market demand remained subdued in metropolitan areas and London
-- Across our entire UK estate, occupancy levels steadily
improved on a weekly basis, averaging 51% in August, while UK
Restaurant performance was boosted by the positive impact of the
Eat Out To Help Out scheme. August UK total sales (accommodation
and food and beverage) improved to 38.5% down year-on-year
Near-term outlook & actions:
-- A rapid and robust operational response at the start of the
crisis helped protect our teams, guests and the continuity of the
business, and ensured the safe reopening of our hotels and
restaurants with strong social distancing and hygiene standards
-- Our financial response included significant reductions in
discretionary spend and capital expenditure, suspension of the
dividend, voluntary pay cuts for the Board and management team, and
use of UK and German government support packages
-- The completion of a GBP1bn rights issue enhanced both our
financial flexibility and our ability to successfully execute our
strategy in the UK and Germany
-- We continue to focus on taking measured and appropriate
action, at the right time, to protect the business. With market
demand expected to remain at lower levels in the short to
medium-term, we have now taken the very difficult decision to
announce our intention to enter into consultation on proposals that
could result in up to 6,000 redundancies for our hotel and
restaurant colleagues (representing 18% of our total workforce). We
expect a significant proportion of these redundancies to be
achieved voluntarily. Our priority now is to ensure that the
process is fair and that impacted colleagues are supported
throughout
-- This is a regrettable but necessary step to ensure that we
emerge from the crisis with a lower cost base, a more flexible
operating model and a stronger more resilient business
Medium-term opportunity:
-- The strength of the Premier Inn brand and winning operating
model is evidenced by our ability to quickly reopen our business
and perform ahead of the market
-- We are well-placed to continue this outperformance against
the budget branded and independent competitor sets, as both become
increasingly constrained
-- The business retains a strong balance sheet and is
well-placed to take advantage of enhanced structural opportunities
in the medium to long-term
H1 Financial performance:
UK like-for-like UK total sales UK & International
sales change change total sales
change
------------------- ------------------ ---------------------
Q2(1) H1(2) Q2(1) H1(2) Q2(1) H1(2)
----------------- --------- -------- -------- -------- ---------- ---------
Accommodation (77.1)% (78.2)% (76.6)% (77.7)% (75.5)% (77.1)%
Food & beverage (72.8)% (76.6)% (72.6)% (76.3)% (72.4)% (76.1)%
----------------- --------- -------- -------- -------- ---------- ---------
Total (75.6)% (77.6)% (75.2)% (77.2)% (74.5)% (76.8)%
----------------- --------- -------- -------- -------- ---------- ---------
1: Q2 = 13-week period ended 27 August 2020 | 2: H1 = 26-week
period ended 27 August 2020
The Group's financial performance in the first half of the year
reflects the closure of the UK business from the end of March until
the reopening of hotels and restaurants commenced at the start of
July, and the closure of our hotels in Germany from the end of
March until the middle of May.
In the UK, the vast majority of hotels and restaurants were
reopened by the first week of August, and a total of 801 hotels,
representing 98% of total UK capacity were open by the end of
August. In Germany, all six operational hotels were closed at the
end of March, and reopened during May, alongside 13 of the acquired
Foremost hotels that were fully refurbished and rebranded during
the lockdown period, to bring a total of 19 hotels now open.
Since reopening, total UK accommodation sales growth was ahead
of the market, benefitting from the fast reopening, the strength of
the Premier Inn brand and our leading customer proposition. Demand
was strong in seaside & tourist locations, with occupancy
levels of almost 80% during August in those locations. However,
demand remained subdued across the rest of the hotel market,
particularly in London and metropolitan areas. Across our entire UK
estate, overall occupancy levels steadily improved on a weekly
basis, averaging 51 % in August with year-on-year accommodation
sales recovering to -47.3%, while UK Restaurant performance was
boosted by the positive impact of the Eat Out to Help Out scheme.
Total UK sales (accommodation and food and beverage) improved to
-38.5% in August.
Performance trends in Germany mirrored the UK, with strong
demand and occupancy levels in tourist locations, while locations
with a greater business skew remained at low occupancy levels. In
August, total sales were over 300% ahead, boosted by the acquired
Foremost hotels, while occupancy recovered to 54%. We continue to
actively assess opportunities to accelerate our pipeline growth in
Germany.
Update on operational review and cost efficiency programme
Throughout the COVID-19 crisis, management has taken quick and
decisive action to protect the business and to position it for
long-term success. This included the rapid closure of our
businesses in March, the immediate postponement and cancellation of
all non-critical spend and accessing Government schemes to secure
the liquidity of the business, followed by the GBP1bn rights issue
that will help successfully position the business in the
medium-term. We are also close to completing a process that will
result in a reduction of our head office headcount by approximately
15%-20%.
In line with previous announcements, we expect demand to remain
subdued in the short to medium-term and the UK Government's
furlough scheme to come to an end in October. We have taken the
very difficult decision to announce our intention to enter into
consultation with our UK hotel and restaurant colleagues on
proposals that could result in up to 6,000 redundancies, of which
it is hoped that a significant proportion can be achieved
voluntarily, along with reductions in contracted hours for a
proportion of our colleagues. These changes create a more flexible
labour model that can adapt with changes in the demand environment
going forward. Our priority is to ensure that the process is fair
and that impacted colleagues are supported throughout.
The impact of these changes is already reflected in the external
guidance given at our full year results announcement on May 21st,
where every one percentage point of total revenue decline, net of
cost savings, resulted in a c.GBP18m adverse impact on profit.
One-off costs to achieve are expected to be approximately
GBP12-GBP15m.
Current trading and outlook:
Trading in the first two weeks of September saw year-on-year
total accommodation sales remain ahead of the market. Bookings in
tourist destinations remain strong, and business bookings are
growing, albeit from a low base. September and October are
traditionally a period when business bookings pick-up after the
quiet summer period, however at this point it is too early to
assess the impact of COVID-19 on this traditionally busy booking
period.
We also note recent UK Government announcements regarding
increased local and regional lockdowns and we will continue to
closely monitor the situation.
Whitbread will provide a further update at its interim results
announcement on the 27 October 2020.
Comment from Alison Brittain, CEO:
"Our teams have worked very hard to reopen our hotels and
restaurants and we are now firmly in the "restore" phase of our
response to the COVID-19 crisis. Our performance following the
reopenings has been ahead of the market, however, it has been clear
from the beginning of this crisis that even as restrictions are
eased and hospitality businesses such as ours reopen their doors,
that demand would be materially lower than FY20 levels for a period
of time. Given this backdrop, we have already taken extensive
action to protect the business, retain financial flexibility and
position it for long-term success. We continue to work hard to
ensure that we emerge from the crisis with a more flexible
operating model and a stronger, more resilient business.
With demand for travel remaining subdued, we are now having to
make some very difficult decisions, and it is with great regret
that today we are announcing our intention to enter into a
consultation process that could result in up to 6,000 redundancies
in the UK, of which it is hoped that a significant proportion can
be achieved voluntarily. In line with our longstanding values of
treating our people fairly, our priority is now to ensure that this
process is clear and transparent for all colleagues and that
everyone impacted is supported throughout.
We will continue to focus on the safety of our guests and teams
and the continuity of our business. Maintaining our financial
flexibility alongside our leading operating model and powerful
brand will allow Whitbread to pursue enhanced long-term structural
growth opportunities both in the UK and Germany. This will leave us
in a position of strength to continue to invest, increase market
share, support our colleagues, guests and suppliers and create
value for shareholders."
For more information please contact:
Investor queries | Whitbread |
investorrelations@whitbread.com
Media queries | Tulchan Communications, David Allchurch /
Jessica Reid | +44 (0) 20 7353 4200
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END
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