Severe winter weather hits Greggs’ sales

Weak footfall caused by severe winter weather contributed to a like-for-like fall in Greggs’ sales during the first 18 weeks of the year.

In its latest trading update the FTSE 250 bakery chain reported that like-for-like sales in company-managed shops were up 1.3%, but down from the 3.2% experienced during the first eight weeks of the year.

Poor weather conditions in early spring, which had caused the temporary closure of some shops, was one of the reasons behind the weaker customer footfall that hit food-to-go trade in retail locations, the business claimed.

Greggs said that average transaction values continued to grow, but it had seen a “reduction in like-for-like transaction numbers”.

Overall, total sales for the 18 weeks to 5 May rose 4.7% - customers continued to recognise the quality and value of the company’s £2 breakfast offer, while hot food offer was another area of growing customer demand as it provided food-on-the-go options throughout the day, the business said.

It added that sales of healthier options had continued to rise as it extended its menu choice – Greggs recently launched two new salads for the summer, Feta and Beetroot Dip with Grains & Lemon and Herb Chicken with Roasted Vegetables and Grains as well as a range of new snack pots and its first Balanced Choice sweet option, a Belgian Chocolate Pot.

Altogether 36 shop refurbishments were carried out in the first 18 weeks of the year. There were also 41 new shops openings, including 14 franchised units in transport locations, with a focus on increasing the brand's reach into new food-on-the-go locations as well as the relocation of existing shops.

Westminster Tube station, Birmingham New Street station, Glasgow Buchanan bus terminal and East Midlands airport were among the most recent openings.

Greggs closed 12 shops, giving a total of 1,883 shops trading at 5 May, comprising 1,669 company-managed shops and 212 franchised units. 

The business said it was making ‘good progress’ with the investments in its supply sites that would consolidate manufacturing operations and extend its distribution capacity to support further growth in shop numbers

Work was under way at sites in Leeds, Newcastle and Manchester and planning was well advanced for work that will commence in the second half of 2018 at other sites. 

“Sales in May have started more strongly than we experienced throughout March and April. However, given the uncertainties over market footfall we are cautious in respect of the outlook for sales in the balance of the year,” the trading update stated.

“We are well positioned to compete for sales in the months ahead with the launch of our new summer menu featuring new sandwiches and salads and we will be extending our offer of value meal deals. Costs are being controlled tightly with food input cost inflation easing in line with our expectations, and we expect this trend to continue.

“Taking into account trading conditions in the year to date, and our more cautious outlook, we currently believe that underlying profits for the year are likely to be at a similar level to last year.”

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