Record rainfall hits Greggs’ LFL sales

Greggs is looking to maximise on new markets and store formats, as like-for-like (LFLs) sales dropped 3.5% in the second quarter of 2012.

The news comes as the high street bakery retailer announced its interim results this morning for the 26 weeks ending 30 June 2012. The company recorded a 2.3% decline in LFLs overall for the first half of the year, while pre-tax profit fell £800,000 to £16.5m with a net operating margin of 4.7% (5.2% in 2011).

Greggs attributed the drop to a more than 7% fall in footfall on UK high streets during this period, impacted by record levels of rainfall.

The high street bakery firm reported a 4.5% rise in sales to £350m in H1 2012.

Ken McMeikan, chief executive of Greggs, said: “Our tight control of costs and the added contribution from wholesale partially mitigated the profit impact, resulting in a £0.8m decline in first-half profits.”

McMeikan added that conditions for consumers were likely to remain challenging for the rest of 2012, but would “continue to make strong progress towards our strategic goals and remain confident in our ability to deliver long-term profitable growth for the benefit of shareholders, employees and the wider community”.

More accessible

McMeikan explained the business was looking to make the Greggs brand more accessible to new customers in the future by focusing on its shop opening programme and “further development of our wholesaling and franchising channels”.

Greggs opened 33 net new outlets during the six months, taking its overall store count to 1,604 at the end of June. The company said it was on track to meet its target of 90 new shops, net of closures, for the year.

The firm has also refurbished 64 existing sites in total, meeting expectations to refurbish between 100 and 120 shops by the end of 2012.

Openings include the motorway outlets with Moto Hospitality, which Greggs trialled earlier this year at two sites, and will now roll out to a further 28 UK locations, creating an additional 500 jobs.

The Greggs Moment coffee shop concept, which consists of four stores trading at present, will also be a focus for the firm in the future. It will be opening its fifth store in Gateshead on 9 August.

In June, the company opened a traditional bakery format called Greggs the Bakery in Newcastle Upon Tyne, which serves 75 new lines, including artisanal breads and made-to-order sandwiches. McMeikan said it was encouraged by the early performance of both Greggs the Bakery and Greggs Moment.

Greggs is also capitalising on its partnership with frozen foods retailer Iceland, first established in July 2011, to supply a ten-item range of ‘bake at home’ products to 750 of its stores. The company said sales in this sector had performed very strongly and were already making a contribution to profits.

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