Costa Coffee sales dip 2% in Q1

Coffee chain Costa has reported a fall in like-for-like sales at the start of the year, blaming a lack of shoppers on the high street.

Although total UK sales grew by 5.2% due to new store openings, according to Costa owner Whitbread, the UK’s biggest coffee chain revealed a 2% drop in like-for-like sales – which exclude new openings or store closures – in the first three months of the year.

The announcement came against a backdrop of widespread retail trouble. Since the beginning of the year, Maplin, House of Fraser, New Look, Poundworld and Toys R Us have gone into administration and many UK’s big name retailers are closing stores including Marks & Spencer, House of Fraser, Mothercare, New Look, Byron, Jamie’s Italian, and Prezzo.

Costa, which has more than  2,400 UK coffee shops and 1,400 outlets in 31 overseas markets, said it was refocusing its network towards “high-footfall and convenient locations”, aiming to triple its presence in China while listing itself as a separate business – outside the Whitbread fold – by 2020.

Analyst Neil Wilson from trading platform Markets.com said: “We have been seeing and warning about declining like-for-like at Costa for some time and this 2% drop is a concern about how the brand is performing on the high street. Lower footfall is one thing, but we continue to see Costa facing tougher competition from artisan coffee retailers who are taking market share.”

Whitbread boss, Alison Brittain, added: “Whilst 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.”