Stock Watch

Whitbread share price in focus as group posts first-half loss

CMC Markets

The Whitbread share price will be in focus today after the company swung to a first half statutory loss of £724.7m, from a profit of £219.9m  last year. 

In the six month period, statutory revenue was £250.8m, and that was a big fall from the £1.08bn registered on year ago. The owner of the Premier Inn hotel chain was rocked by the pandemic.

Whitbread share price to move after huge loss?

Total statutory revenue amid the lockdown collapsed by 99%, but business has been slowly recovering. In September, occupancy rates in the UK’s Premier Inns was 58%, which was an improvement on the 51% posted in August. The German division is performing relatively well as it has 21 hotels open, and keep in mind that it only had six in operation by the start of the first half.

Earlier this month, the British government advised that people should work from home if they can. In addition to that, there have been localised restrictions too, and Whitbread experienced a drop-off in activity because of the developments. Whitbread was able to see through the worst of the health emergency, and it proved that it was able to stage a respectable recovery, but there are factors at play that are beyond its control. Not surprisingly, the company cautioned there is limited visibility in terms of outlook.      

The Whitbread share price came under pressure in July on the back of the first-quarter numbers. The company announced that total UK LFL sales slumped by almost 80%. With respect to the UK, in excess of 270 hotels and 24 restaurants had reopened. In June, the firm raised £1bn from a rights issue so that reassured traders somewhat as it showed it be able to ride out the difficult times.

Last month, Whitbread revealed that it will cut its workforce by up to 6,000 - the majority of the redundancies will be voluntary. Job cuts on that scale would equate to a decline in staff numbers of 18%. The group confirmed that business was picking up.

Pandemic sell-off hits Whitbread share price

In December 2019, the Whitbread share price hit a four-year high on the back of the news that the Conservative Party won a sizable majority at the UK general election – the decisive victory for the Tory party gave a boost to British stocks as the party is pro-business. The stocked cooled a little in early 2020, and then it underwent a major sell-off amid the pandemic. Between mid-February and mid-march, the Whitbread share price declined by roughly 60%.

Like the broader market, it enjoyed a rebound to June, but since it has been largely range bound. The leisure sector is extra sensitive to the pandemic, and for that reason, some traders are avoiding the stock. Should the Whitbread share price move lower it might find support in the 2,000p area. A break above the 2,618p zone should pave the way for further gains.      


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