Profits at Greggs fell nearly 29% in the first half of 2013, the high-street baker revealed today, as it outlined plans to seize more of the ‘food-on-the-go’ market.
Pre-tax profits for the 26 weeks to 29 June fell to £11.4m from £16m a year ago, while like-for-like sales dipped 2.9%.
“Our focus for the future will be on winning in the growing food-on-the-go market”
Roger Whiteside, Greggs
Greggs blamed extended cold weather earlier in the year for the decline in sales. It also said trading in the five weeks to 3 August was impacted by the recent heatwave, with like-for-like sales falling 3.2% compared with the same period last year.
Overall profits for the year are now likely to be around £3m lower than expected.
Total group sales rose 3.4% to £362m in the first half of the year, with the net addition of 19 outlets – it opened 37 new outlets but closed 18.
“Greggs is a strong brand that has the ability to grow shareholder value over the long term. Our focus for the future will be on winning in the growing food-on-the-go market. As a consequence we will spend the next two to three years reshaping the business as we build the platform for long-term sustainable profit growth for the benefit of shareholders, employees and the wider community,” said Greggs CEO Roger Whiteside.
Whiteside – who took over the reins on 1 March – completed a thorough review of the business with his senior management team on 1 July, resulting in several changes to Greggs’ strategy.
Greggs will focus on refitting existing stores rather than increasing the net number of stores. It has completed 90 shop refits so far in 2013 compared to 64 in the same period in 2012, but hopes to complete a total of 220-240 by the end of the year, it said.
Greggs has put frozen food expansion plans on hold as it embarks on a three to four-year reshaping of its business
“Whilst over many years Greggs has developed a leading position in the bakery market, customer preferences are shifting towards ‘food on the go’. Food on the go is a £6bn market growing at an annual rate of 9% and some 75% of customer visits to Greggs are already fulfilling a food-on-the-go need,” Whiteside said.
“While Greggs has defended its position as the leading retail bakery business it has underperformed the food-on-the-go market as new entrants and existing competitors have rapidly expanded shop numbers and better met customer demands.
“With Greggs’ strong brand and national coverage we see significant opportunities in this area and so a number of changes are being announced today that will position us better for medium- and long-term growth.”