Greggs unveiled full-year pre-tax profits last week of £49m - up 12% on 2006. This is despite substantial rises in the cost of energy and key ingredients including flour and vegetable oils, which pushed up selling prices by 5% over the year.
MD Sir Michael Darrington gave an upbeat assessment of the company’s prospects at a press conference announcing the preliminary results for the UK’s largest bakery business for the 52 weeks to the 29 December, 2007. He said its three-year strategic marketing campaign was beginning to bear fruit and the company was planning to accelerate its programme of opening shops.
He said that record operating profits, up 13% to £47.7m, were "significant" because they excluded a £2.2m gain from the sale of bakery sites in Newcastle, Glasgow and Manchester. Revenues rose 6.4% to £586m during 2007 and sales for the first 10 weeks of 2008 were up 6.2%.
But Sir Michael warned of "more inflation to come" and said he would be "horrified if prices went massively higher than they are at the moment". He blamed part of the rise in global commodity prices on the activities of speculators.
After tough trading conditions in 2006, Greggs opened 56 shops last year and closed 24 - a net increase of 32, taking the total number to 1,368 by the end of 2007. Sir Michael confirmed that Greggs will open 70 this year and close 30. He said the closures were not because shops were losing money but often as a result of trade moving "further down the high street" by the time 20-year leases had expired.
Sir Michael said that around 150 Greggs shops are now trading on Sundays and a company statement accompanying the results revealed that weekday opening hours were being extended "where local demand exists".
He told British Baker Greggs planned to extend its range of hot sandwiches and added that he wanted to see less fat in products "over time".
But he emphasised that this should not deflect from the main priority of "selling products that people really enjoy".