Greggs plans to build an additional bakery in the south of England to support the proposed opening of 600 new stores.
In its half-year statement in August, the bakery chain said it aimed to open 30-40 net new shops in 2010, but an interim statement this week revealed this has now been revised to 50-60, doubling its historic rate of new store openings. From 2011 it plans to open at least 70 net new shops per annum. It also hopes to double its shop refits to 120 per annum from 2010.
Sales performance in the 42 weeks ending 17 October 2009 rose steadily, up 3.8%, with like-for-like sales up 1%. However, for the first 16 weeks of the second half, like-for-like sales were up only 0.2%.
The bakery retailer reported that, although this year’s good wheat harvest and reduced energy costs have eased some pressures, these had been partly offset by cost increases in a number of ingredients, particularly meats.
In order to fulfil its plans for expansion and ensure an effective distribution network, Greggs said it planned to build an additional new bakery to support growth in the south, as well as replace its bakery in Twickenham and extend other bakeries "to facilitate greater expansion than previously planned".
Chief executive Ken McMeikan said he was pleased with the firm’s sales performance against a backdrop of tough trading conditions.
"We are on track to deliver our targets for the year, although the final outcome will depend on consumer sentiment and spen-ding over the important Christ-mas period."
One city analyst said it was "a very credible trading update", adding that the firm is a "steady reliable business" with reliable stock.