Greggs gives profit warning

Greggs has predicted poor profits in an interim management statement released today.

The profit warning comes after the high street baker described a poor like-for-like (LFL) in-store trading for the period January to March, which was “particularly impacted by adverse weather,” it said. In its outlook for the year the company said it did not expect any “significant improvement” in the current market conditions.

Total sales for the 17 weeks to 27 April 2013 grew by 3%, which was put down to a programme of “continued development” of wholesale and franchise sales, as well as a new shop opening programme. Despite this, LFL sales in the last two weeks showed a decline of 1.5% and the company said it had continued to see “lower footfall across much of the estate, although average transaction values have increased marginally”.

According to Greggs, the period saw 18 new shops open and included six franchised units with Moto Hospitality. “This is in line with our plan for the year and represents a net addition of 10 shops after eight closures, giving a total of 1,681 shops at 27 April,” said Greggs.

“Our partnership with Moto is going well and there are now 16 Greggs shops operated under licence by Moto in their motorway services. We also completed 59 shop refurbishments in the period, in line with our plan to refit around 250 shops during 2013.”

Greggs said the business will remain focused on continuing with its plans to invest in its core sales performance, while “taking action to reduce costs”. It added: “Despite good cost control, overall profits have been affected in the first quarter of the year and are behind our plan and last year. The business remains highly cash-generative and maintains a strong balance sheet position.”