Warburtons, which reported £20.7m pre-tax profit a year ago, has made a £13.5m loss as a result of restructuring costs and falling bread sales.

With the core wrapped bread market continuing to decline, the company saw sales fall 3.5% year on year to £506.4m in year ended 29 September 2018.

Despite the launch of products including a wrapped bloomer and sourdough Toastie loaf over the period, NPD did not offset the decline in the Warburton’s established core ranges. In the previous 12-month period, when the company had reported a 0.3% drop in overall sales, revenue had largely been held up by growth in non-bread lines, which include crumpets, bagels and teacakes.

The company reported it had found it “challenging” to fully recover core cost increases in the past year, and that profits had been hit by £19.6m in exceptional costs.

These included £5.7m after Warburtons ended bread production in Stockton-on-Tees, although it still produces crumpets at the site. In addition, the business also made around £6m in charges against plant and equipment it no longer required.

A further £6.8m loan to Giles Food Limited has been written off. The business, which had produced own-label products including garlic bread, was shut down by Warburtons in summer 2017.

“The wrapped bakery market continues to be very challenging and this, coupled with increased costs and some exceptional items, impacted our results for the 2017/2018 financial year," said Warburtons chairman Jonathan Warburton.

"However, excluding the exceptional costs, the underlying business remains profitable. During the same period, we also invested significantly in our business to meet changing consumer trends and to ensure we are well placed for long term growth.”

Recent activity by Warburtons has included the launch of a new bagel range that is being promoted with adverts starring Robert De Niro.