(Sharecast News) – Whitbread has cut 1,500 jobs and warned of a “challenging” trading environment, as the latest round of lockdown restrictions caused accommodation sales to plummet by more than half.
Updating on third-quarter trading, the owner of Premier Inn, Beefeater and Brewers Fayre, among others, said it had completed a previously-announced restructuring of its hotel and restaurant operations, resulting in the loss of 1,500 jobs. It is, however, less than initially forecast by the blue chip, for around 6,000 job losses.
Whitbread said it had taken the action “to ensure our cost base is reflective of the current demand environment”.
In the 13 weeks to 26 November, like-for-like UK accommodation sales were down 56.0%, with occupancy at 49.3%. Food and beverage sales were down 54.4%.
Group sales, which includes Whitbread’s German Premier Inn business, were off 55.6% in the third quarter, and by 70.2% in the year to date.
Looking to current trading, Whitbread said that the majority of its UK hotels had remained opened during the first half of December, supported by improved business travel, but demand had begun to fall as tier restrictions were tightened.
In the five weeks to 31 December, UK sales slid 66.4%, with occupancy at 31.1%. German sales were off 54.7%. Total group sales tumbled 73.3% over the same period.
Since 4 January, when the government announced stay-at-home measures, around a third of Whitbread’s hotels have been temporarily closed, along with all its restaurants.
Whitbread said: “The short-term trading environment remains challenging, and given the ongoing and fast-changing nature of the Covid-19 situation, visibility of expected revenue and cost trends remains very limited.”
Alison Brittain, chief executive, said: “We expect the current travel restrictions in the UK and Germany to remain until at the very least the end of our financial year. With the vaccination programme underway, we look forward to the potential gradual relaxation of restrictions from the spring, business and leisure confidence returning, and our market recovering over the rest of the year.
“We continue to protect our liquidity through the careful management of our cash position, and to take actions to ensure that we exit the crisis as a leaner, stronger and more resilient business.”
Shore Capital, which has a ‘buy’ recommendation on the stock, said: “Although trading has deteriorated subsequently, as tight restrictions were imposed, cash burn remains under control, and Whitbread remains in a modest net cash positioning entering calendar 2021.” As at 1215 GMT, shares in the blue chip were ahead 5% at 3,224.88p.