Greggs has issued a profits warning for the year despite a rise in third-quarter sales at the bakery retailer.

Without releasing figures, Greggs said like-for-like sales had improved by nearly 4% for the 16 weeks to 4 October. However, it warned that major cost increases over the past year would hit its bottom line to the tune of £3m.

More positively, the company said a levelling-off of those cost increases would lead to an improved performance in the coming months.

The board also said it was reducing capital expenditure for the year from the expected £40m to around £36m.