Greggs hikes dividend as healthy food sales help boost profits
Greggs has reported a jump in sales for last year, and has hiked its dividend after growing profits – but the baker is looking at job cuts as it aims for greater supply chain efficiency.
The figures
Total sales rose seven per cent to £894.2m from £835.7m, while company-managed like-for-like sales (which excludes franchises) went up 4.2 per cent.
Pre-tax profit increased to £75.1m from £73m.
The bakery chain increased its dividend by 8.4 per cent to 31p per share, compared with 28.6p per share last year.
Shares in Greggs dropped two per cent at the open.
Why it's interesting
Greggs said its Balanced Choices range now accounts for over 10 per cent of total sales, vindicating its decision last summer to go into the healthier food market.
However, the group warned that it is facing "a period of greater economic uncertainty and increased pressure from cost inflation" in the short term, and as such, there will be job losses in its manufacturing operations.
The company said it had communicated proposals for supply chain changes to staff at each of its sites last month, "including the planned impact of consolidating our manufacturing operations".
"Overall our expansion plans will create thousands of new roles in retail and distribution operations, but will result in fewer roles in manufacturing," Greggs chief executive Roger Whiteside said.
"We have therefore entered into consultation with trade unions and employee representatives over the detail of these proposals."
What Greggs said
"In 2016 we delivered another strong performance as we continued on our journey to transform Greggs from a traditional bakery business into a modern, attractive food-on-the-go retailer," said Whiteside.
"Our product offer is evolving to meet the changing needs of our customers and our shop estate and service levels have benefited from significant investment.
"The UK consumer outlook is more challenging than we have seen in recent years, with industry-wide pressures emerging in commodities as well as labour costs. However we are confident of making further progress as we implement our plan to grow Greggs as a contemporary food-on-the-go brand."