Costa like-for-like sales have fallen in the last three months – although overall sales rose thanks to new store openings and Express machine roll-outs.
The Whitbread-owned coffee chain reported UK like-for-like sales down 2% year-on-year in the first quarter of its financial year as a result of weak footfall in traditional shopping locations and “general retail market conditions”.
It said sales through travel locations had continued to show good growth, and that overall UK sales growth of 5.2% had come from new stores and Express machines.
The total UK sales increase from Costa Express machines was 9.6% in the quarter, driven by installations of new machines over the past year and like-for-like sales growth. Although the number of global machines remained flat, Costa hoped to install 1,300 worldwide in the current financial year, with international trials under way in Europe.
New products rolled out in the UK included a wider range of savoury snacks and Flat Black and Flat Mocha coffees. Costa has also upgraded point-of-sale terminals across the UK, enabling the business to introduce a meal deal and trial mobile coffee ordering in 16 London stores.
Costa’s growth has continued in China, reported Whitbread, adding that plans were on track to open 100 new stores this year and continue to launch new products.
With regards to the previously announced plan to demerge Costa from the wider Whitbread business, the company said “constructive early steps” had been taken.
“Good progress continues to be made on the core infrastructure and efficiency work that was already under way,” reported the business, adding that a further update on the demerger would be given in its interim results in October 2018.
The business, which also owns the Premier Inn chain, reported 3.2% overall sales growth in the period.
“Both the budget hotel market and the coffee market present long-term structural growth opportunities,” said Whitbread chief executive Alison Brittain.
“While we are cautious of shorter-term trading conditions in the UK, due to well-publicised consumer trends, we are confident that we have the right strategies in place to enhance our UK and international market positions and ensure each business is well-positioned to thrive as a separate entity.”