Greggs to cut 355 jobs and shut three bakeries
The bakeries slated for closure included those in: Edinburgh, Twickenham in London and Sleaford in Lincolnshire.
A spokesman for the business said: “Greggs currently operates from 12 bakeries, unfortunately not all are suitable for long-term investment due to their location and size.”
While acknowledging the “difficult changes”, the spokesman added that they were needed to support the long-term growth of the business.
The firm’s immediate priority was to minimise the negative impact on staff. “Wherever possible we would look to offer alternative employment to affected employees but, due to the location of our sites, we anticipate that unfortunately many will leave the business.”
Preliminary results
The decision was revealed yesterday (March 1) with the publication of Greggs’s preliminary results for the 52 weeks to January 2 2016.
The bakery food-on-the-go retailer posted total sales up by 5.2% to £835.7M and company-managed shop like-for-like sales up by 4.7%.
Pre-tax profit excluding exceptional items climbed by 25.4% to £73M compared with £58.3M the previous year.
£100M investment programme
Greggs planned to launch a £100M investment programme over the next five years to facilitate the transition from being a traditional baker to specialising in food-on-the-go.
The firm’s Clydesmill bakery in Glasgow would benefit from investment to make it a “centre of excellence” in Scotland.
Greggs’s Enfield bakery in London will also receive an upgrade.
Last year the retail bakery opened 122 new shops and closed 74. That included the transformation of 20 of its larger bakery cafés to its ‘bakery food-on-the-go’ format.
Greggs now operated about 1,700 shops and planned to boost that number to 2,000.
What the analysts say about Greggs’s results
Verdict Retail analyst Greg Bromley
“The key to Greggs’s recent success has been a strategic focus on the food-to-go market, which has seen it move beyond its roots as a pasty purveyor and traditional bakery business. Its more inviting store environments and investment in offering more relevant and better quality product ranges appeals to a lucrative market of workers, consumers on the move, and those at its traditional high street locations.
“Low prices are also a key USP [unique selling point] for Greggs. Its £2 meal deal, especially popular with breakfast consumers – is helping it to win spend from more premium players such as Pret and EAT, that have traditionally dominated the food-to-go market, especially in the south of the country.”
N+1 Singer, analyst Sahill Shan
“Greggs has reported financial year [FY] 2015 finals slightly above expectations. It has had a cracking start to FY16 with 4.2% like-for-like sales and outlined a cost efficient plan to grow the estate significantly beyond 2,000 shops.
“We upgrade FY16–FY17 earnings per share by 2–3% and believe the risk is on further upside. We see fair value towards about 1,200p.”
