Greggs has reported a fall in pre-tax profits, blaming last year’s weather for disappointing preliminary results for 2012.
Pre-tax profits fell by 2.2% to £51.9m with like-for-like sales down 2.7%.
“If you don’t go out for a sandwich [at Greggs] on Monday because it’s raining, you’re not going to buy two on Tuesday, said Greggs’ new CEO Roger Whiteside, before citing the wettest year on record for 100 years as a major factor in the chain’s performance.
Total sales were up 4.8% to £735m helped by strong growth in the sale of fresh coffee, which grew by 23%, and by the company’s frozen range, which is supplied exclusively to Iceland.
Whiteside referred to the challenge of maintaining high-street footfall and what it means for the chain’s continuing expansion. “The places we are looking at are where people work, travel and live, but most of our best shops are still on high streets.”
Whiteside announced an increase in capital expenditure to £55m-65m, up from £47m in 2012. The money will be spent on the opening of a new factory in the Midlands, a doubling of shop refits to 250 and the opening of 50 new shops and 15 Moto service stations outlets.
Planned cost savings of £10m have been delivered two years early, the company said, and an extra £5m of savings will be made by 2014.
Arun George, analyst at Edison Investment Research, said: “Greggs’ outlook has been downgraded with a minimal growth in profits but the lack of any drastic change in strategy by the new CEO suggests that the Greggs’ model is not fundamentally broken. From a medium-term perspective, Greggs is utilising its cash flows to stabilise and subsequently grow like-for-like sales and margins. The shares will likely be under pressure today partly due to its strong run.”