The baker reported company-managed shop like-for-like sales had increased 3.6% in the 19 weeks to May 13. Total sales were up 7.5%, driven by its breakfast and Balanced Choice ranges, Greggs reported today (May 18).
It completed 87 shop refurbishments over the 19 weeks, and opened 42 new shops. It also closed 14 of its shops. Shop openings would focus on new food-on-the-go locations, and new catchments including Northern Ireland and the south west of England.
Hit annual targets
Cost inflation had impacted Greggs’s profit margins, it revealed. But, it still expected to hit its annual targets, Greggs added.
Greggs trading update – at a glance
- Total sales up 7.5%
- Company-managed shop like-for-like sales up 3.6%
- 42 stores opened
- 14 stores closed
- 87 store refurbishments
“We have made a good start to 2017 although the sales outlook remains uncertain in the context of slowing growth in disposable incomes,” Greggs said.
“Input cost inflation is having a modest impact on margins in the first half of the year as expected, however we have increasing visibility of costs for the second half and anticipate this pressure to ease towards the end of the year. Whilst this pattern will constrain profit growth in the first half of the year, we expect to make progress in line with our previous expectations for the year as a whole.”
Plans to cut up to 220 jobs
Also in the trading update, the company confirmed it had finished its consultation process, and was now looking to start the planned restructuring, it confirmed today. Greggs had revealed plans to cut up to 220 jobs in Wales and Scotland, according to unions.
A Greggs statement said: “We have concluded the consultation process with staff affected by the planned consolidation of our manufacturing operations and now have a basis on which to commence the investment programme that will support further growth in shop numbers and improved quality and efficiency in manufacturing.”
What the analysts say about Greggs
- “We see scope to nudge up our sales forecasts, particularly as the contribution from new space is also a little ahead of our expectation, with a net 28 new stores opening in the year to date, including 20 franchise stores in transport locations. In addition, a further 87 shops have been refitted.”