22nd Sep 2020 08:46
(Alliance News) - Premier Inn-owner Whitbread PLC on Tuesday said it is looking to shed up to 6,000 jobs after reporting a slump in half-year sales due to the closure of its hotels and restaurants because of the Covid-19 pandemic.
Shares in the Dunstable, England-based company were down 2.5% at 2,055.75 pence each in London, recovering after opening down at 1,997.00p. The stock has more than halved so far in 2020.
Total sales were "significantly" down year-on-year in the six months ended August 27, due to the closure of the vast majority of hotels and restaurants for a large chunk of that period, the FTSE 100-listed company explained.
First half UK like-for-like sales were down 78%, with total sales down 77%. UK & International sales were down 77%.
For the second-quarter to August 27, UK like-for-like sales were down 75.6%, with total sales down 75.2%. UK & International sales were down 74.5%.
The majority of hotels and restaurants were reopened by the first week of August, the company said, and a total of 801 hotels, representing 98% of total UK capacity, were open by the end of August.
Since reopening, UK accommodation sales performance has been ahead of the market, Whitbread said. Occupancy levels have improved on a weekly basis across the entire UK estate, averaging 51% in August, while restaurants got a boost from the UK government's Eat Out to Help Out scheme.
August UK total sales - including both accommodation and food & beverage - were down 39% year-on-year.
Whitbread commented: "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."
With market demand expected to remain at "lower levels" in the short to medium-term, Whitbread said it has decided to enter into consultation on proposals that could result in up to 6,000 redundancies across its hotel and restaurant staff - representing 18% of the total workforce.
Whitbread also said it is close to completing a 15% to 20% reduction in head office staff. The company expects a significant proportion of these redundancies to be achieved voluntarily.
The company said the financial impact of the changes it is making already is reflected in the guidance it gave in May with its full-year results. Every percentage point of total revenue decline, net of cost savings, reduces profit by GBP18 million, it noted. One-off costs for the job cuts is expected to be about GBP12 million to GBP15 million.
The hotelier added: "We also note recent UK government announcements regarding increased local and regional lockdowns, and we will continue to closely monitor the situation."
More positively, Chief Executive Officer Alison Brittain said: "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.
"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 financial 2020 levels for a period of time."
By Tapan Panchal; [email protected]
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