Strong sales at Costa Coffee have reignited rumours of a split from Whitbread (LON:WTB), its parent company that also owns the Premier Inn hotels chain.
The shares have risen 14% to £34 a share since analysts at Oriel Securities first got the City buzzing about a break-up of the company less than two weeks ago.
The broker, which upgraded the shares to ‘buy’, suggested at the time that Whitbread would become unmanageable if the high street café continues to grow.
It said: “While we do not believe a disposal or demerger of Costa is likely in the short term, if the business continues to grow, it is difficult to believe that the group’s current structure is optimal on a medium term view given the limited interaction between Costa and the rest of the group.”
On Tuesday, Whitbread’s interim results proved that Costa is a vital cog in the profit-making machine.
Underlying profits at the chain were up 20.5% to £43.5 million on sales of £378.8mln, a rise of 21%.
Sales at the rest of the company, the hotels and restaurants business that includes Beefeater and Brewers Fayre eateries, rose 8.7% to £767mln, while underlying profits were 8% higher at £195mln.
Overall revenues jumped 12.4% to £1.14 billion, with group like-for-like sales up 2.8%.
Whitbread shares rose on Tuesday’s figures.