Greggs shares sink as it cancels plan to reopen stores amid lockdown
Shares in high street bakery chain Greggs dropped today after it postponed its reopening plans over fears of attracting crowds.
The bakery chain’s share price fell 4.73 per cent to 1,750p this morning after last night’s announcement that it will now carry out social distancing trials behind closed doors.
Greggs had previously planned to reopen 20 stores in Newcastle, where it is based, to trial new safety measures.
A Greggs spokesperson said: “Due to significant interest in our 20-shop trial, and the risk that excessive numbers of customers may plan to visit Greggs, we will now initially operate these trials behind closed doors in order to effectively test our new operational safety measures.
“We will continue to review this and will invite walk-in customers into our shops only when we can be confident of doing so in the controlled manner we intended.”
Greggs shut its more-than 2,000 stores when the coronavirus lockdown was announced. But it had hoped to open a further 700 branches if the trial was successful.
David Madden, analyst at CMC Markets, said: “The bakery group had originally planned to reopen 20 stores and carry out social distancing guidelines, but for fear of ‘excessive crowds’, it will now carry out those trials behind closed doors.
“This seems more like a minor setback rather than a huge strategic shift, so if the internal trials are successful, the firm is likely to revisit the reopening plans.”
However, Peel Hunt analysts said the decision could be a sign of a bigger problem for Greggs amid the ongoing lockdown measures.
“Does this make the shares a buy (how can too many customers ever be a problem?) or a sell (if it can’t conduct a trial under lockdown, how will it cope in real life?)?
“We think the latter,” said analysts at Peel Hunt, who downgraded their recommendation to “sell” from “reduce”.