LONDON (Reuters) - British leisure group Whitbread (WTB.L) is moving highly-regarded finance chief Chris Rogers to head up its coffee shop chain Costa Coffee, with a remit to deliver ambitious overseas expansion plans.
Whitbread, which also owns budget hotel chain Premier Inn, said on Tuesday Rogers would become managing director of Costa in August and drive forward a five year plan to expand it to 3,500 stores worldwide.
Costa is already Britain’s biggest coffee shop brand with almost 1,400 shops and has a further 800 units in 25 overseas markets, including China and India.
The appointment of Rogers, who has been Whitbread’s finance director for the past seven years, is likely to heighten talk that Costa could eventually be demerged.
Some analysts have suggested Costa could be spun out of Whitbread to realize value for shareholders as it has few synergies with the group’s other major business, Premier Inn.
Deutsche Bank analyst Geof Collyer said the appointment would be met with a combination of relief that the highly-rated Rogers will not be leaving Whitbread and speculation that Costa is being lined up for a demerger.
Collyer said he believed Costa should remain within the group for some time so shareholders can benefit from the significant growth expected from the expansion plans.
“If demerger was a near term option, why is the MD (managing director) leaving? We see an early demerger of Costa as potentially limiting the realizable value from the Costa growth plans for investors,” Collyer said.
Whitbread’s chief executive Andy Harrison said there was no “hidden agenda” behind the management change and reaffirmed his view that Costa’s future lay within Whitbread. However, he declined to rule out a demerger at some stage in the future.
“The future’s a long time and we’ve always said ‘never, say never’ but let me emphasize we are 100 percent focused on delivering Costa’s growth plan which will create substantial value for Whitbread shareholders,” he told reporters.
Costa’s current MD, John Derkach, is leaving Whitbread to become chief executive of British restaurant firm Tragus, the owner of Cafe Rouge, Bella Italia and Strada.
Derkach told Reuters in January that Costa Coffee should remain part of Whitbread to maximize opportunities for international expansion.
Costa Coffee was founded by Italian brothers Sergio and Bruno Costa, who opened a single cafe in Vauxhall, south London in 1971. It has expanded rapidly since being purchased by Whitbread for 20 million pounds in 1995, taking advantage of the explosion in popularity of coffee shops in Britain.
In recent years, the business has continued to grow, despite harsh economic conditions, being seen as an ‘affordable luxury’ by many customers.
At 0850 GMT, Whitbread shares were steady at 1,867 pence.
Rival Pret A Manger said on Tuesday it would hire 550 staff in the UK this year as it reported a 14 percent rise in earnings before interest, tax, depreciation and amortization (EBITDA) to 52.4 million pounds ($83.9 million).
($1 = 0.6244 British pounds)
Reporting by Matt Scuffham; editing by Rhys Jones and Mark Potter