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Greggs profits slide 2.2%

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High street bakery retailer Greggs has today reported a pre-tax profit decline of 2.2 per cent to £51.9 million, blaming wet weather and pressurised disposable incomes for the fall.

In the 52 weeks ended December 29th 2012, like-for-like (LFL) sales decreased 2.7 per cent though total sales grew to £735 million, up 4.8 per cent on the same period a year earlier.

However, severe snow in January impacted sales and though total sales in the first 11 weeks to March 16th 2013 rose 4.2 per cent, LFL’s fell four per cent over the period as adverse weather added pressure on the business.

Greggs opened 121 new stores in the year, delivering a net increase of 100 as the retailer focused its efforts on franchises, opening 10 in motorway service stations as it seeks to build its convenience offer.

Refurbishment is also an element of the group’s strategy as it seeks to improve the shopper experience with additional space and products and 118 were completed during 2012, while Greggs also launched its local bakery format in 10 locations over the period.

Greggs plans to refit 250 shops in the year ahead, both ‘food on the go’ outlets and the bakery format, while the success of its frozen product range in supermarket Iceland also presents “an exciting new area of opportunity”.

Outgoing Chairman Derek Netherton, who is to leave the business later this year, praised the group for its commitment to growth and highlighted new additions to the senior management team, such as ex-Punch Taverns CEO Roger Whiteside, who took over from Ken McMeikan last month.

Commenting on his departure, Netherton said: “As I step down from the business this year, I am confident that we have the right ingredients for further growth under the leadership of Ian Durant, Roger Whiteside and the management team and that the longer term prospects for Greggs are strong.”

Looking ahead, Whiteside said that, although LFL’s may be affected by closures due to refurbishment, the retailer remains positive about its investment plans.

He commented: “This will undoubtedly be another challenging year for the UK retail industry.

“Greggs is a great business with an iconic brand, outstanding people and a clear strategy for long term, profitable growth.

“As a result I believe that the business is well placed, although profit growth is likely to be held back this year as we invest to strengthen the business for the longer term.”

Published on Wednesday 20 March by Editorial Assistant

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