Greggs profits go cold as sales fall
Baker Greggs has announced a before tax profit fall from £11.4m to £4.6m in the 26 weeks ended 29 June (release).
The firm has seen like-for-like own shop sales down by 2.9 per cent, while total group sales were up by 3.4 per cent in the same period to £362m.
Trading in the first five weeks of the second half to 3 August has been impacted by the heat-wave with like-for-like sales falling by 3.2 per cent compared with the same period last year.
This, along with the change in the mix of sales from food items to lower margin cold drinks, has impacted profits by a further £2.0 million.
As a result of this and the additional costs borne in the first half overall profits for the year are now expected to be around £3 million lower than we had previously expected.
Greggs may have blamed hot weather for weaker sales in this period, but they did the same with cold weather earlier this year.
Allegra has put the total value of the "food on the go" market at £6bn, and Greggs plans to capitalise on this with an increased rate of shop relocations, an accelerated refit program, but limited net shop additions in the next two to three years.
19 new shops were opened during the period, with 20 to 30 openings expected for the year as a whole.
Roger Whiteside, chief executive, commented on the results:
Greggs is a strong brand that has the ability to grow shareholder value over the long term. Our focus for the future will be on winning in the growing food on the go market. As a consequence we will spend the next two to three years reshaping the business as we build the platform for long term sustainable profit growth for the benefit of shareholders, employees and the wider community.