Whitbread curtails expansion as pubs and club sales falter

Leisure conglomerate Whitbread became the latest company to warn of waning consumer spending as it announced a scaling-back of expansion plans for its pub restaurants and David Lloyd tennis and fitness clubs.

Chief executive Alan Parker said declines in comparative sales growth for the six months to March 3 had continued in 2005, in particular at Whitbread's pub restaurant and David Lloyd Leisure businesses.

Group like-for-like sales growth declined from 3% for Whitbread's third quarter to 1.1% for the fourth quarter. Mr Parker added that "underlying trends have continued" for the subsequent seven weeks.

Whitbread's underlying pre-tax profit for the year to March 3 rose 9.4% to £263m. Shares in the group fell 44.5p to 873.5p, making it the biggest faller in the FTSE 100 yesterday.

Mr Parker said: "I am under no illusion that this year is all about delivery in a consumer climate that is likely to get worse before it gets better."

He said further challenges were expected in the form of higher costs from minimum wage rises, increased utility charges and rates revaluations. Whitbread has scrapped plans to increase capital expenditure to £300m this year, sticking instead to a budget of about £260m.

The company is to ditch Brewsters, its 144-strong pub-restaurant chain best known for the toddler-friendly mascot Brewster the Bear, converting sites into its Brewer's Fayre brand.

It cut the planned number of Brewer's Fayre openings this year from more than 25 to under 20. A target of four or five new David Lloyd clubs was reduced to two or three. Four existing David Lloyd clubs were also subject to a £10m writedown, while UK club membership for the full-year was down 2%.

Mr Parker said the focus of expenditure would be on the group's Premier Travel Inn budget hotel business, which includes the Premier Lodge chain.