Greggs full year LFLs fall as Xmas disappoints

High street bakery retailer Greggs saw like-for-like (LFL) sales decline 2.9 per cent during the Christmas trading period, it has been announced today.

Blaming strong comparatives in 2011 and an unfavourable trading pattern which saw two of the busiest shopping days fall on a Sunday, the retailer believes that its overall festive performance was “resilient”, posting a total sales rise of 4.3 per cent for the five weeks ending January 5th 2013.

Over the period, Greggs sold a record 8.5 million mince pies, up seven per cent on last year while its partnership with frozen food specialist Iceland saw sales of its ‘Bake at Home‘ perform strongly.

For the year as a whole, LFLs continued to suffer, down 2.7 per cent on a year previously for the 52 weeks ended December 29th, though total sales increased 4.8 per cent over the period.

During the course of the year, a record 121 new stores were opened while 21 were closed, leaving a total of 1,671 stores across the country as it works to strengthen its growth strategy.

Last month, the bakery retailer announced that CEO Ken McMeikan was to stand down from his role to take up the position at catering supplier Brakes Group, though he remains on board until a suitable successor is found.

Full year results are set to be broadly in line with expectations, McMeikan explained, though he warned: “We expect that the tough trading environment will continue during 2013, with consumers remaining cautious and inflationary cost pressure on a number of key commodities.

“However, having built strong foundations in 2012 for our multichannel approach, we are well placed to drive further sales growth in the year ahead.”

Despite such positivity, experts have warned that the baker is facing growing competition with rivals as local independents and top grocers alike seek to increase their presence in the foodservice business.

Analyst firm Conlumino‘s George Scott said:”Experimentations with new formats mean that Greggs is increasingly competing with new rivals.

“As the UK‘s largest retail bakery business, more direct completion comes from regional players, which lack Greggs‘ scale advantage. However, in foodservice it faces larger threats.

“With similar store estate, Subway continues to expand it franchise model, exploiting low high street occupancy. Meanwhile, lunchtime specialists Eat and Pret A Manager have relatively immature store portfolios on at nationwide level.

“Elsewhere, the grocers are focusing more on this area and, in the long-term, they will be keen to leverage their own scale to foodservice to in pursuit new growth opportunities.

“Overall, against the backdrop of weak consumer spend, and unprecedented wet weather, reducing footfall 2012, Greggs has experienced a challenging 2013, against tough comparatives.

“However, its pipeline of store investment and innovations leave it well placed to gain traction among both new audiences beyond the high street, and as the retail sector at large recovers.”


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