Greggs has this morning reported a 5.9% increase in like-for-like sales in the 16 weeks to 25 April and said that it had completed a capital structure review, declaring a special dividend of 20p per share, a distribution of £20m.
The group, which is led by Roger Whiteside, said it had continued to see a strong trading performance in the first four months of the year. Total sales for the 16 weeks to 25 April 2015 grew by 5%.
Whiteside said: “The strong start to 2015 has been supported by rising consumer disposable incomes and low input cost inflation. We expect market conditions to remain favourable and support a good first half performance, ahead of our previous expectations. In the second half of the year we will come up against stronger sales comparables and a less certain cost outlook. However we expect to deliver good growth for the year as a whole and further progress against our strategic plan.”
During the first 16 weeks, the company completed 69 shop refurbishments and will refit 200 to 220 shops this year. It said that these continue to perform well as it transforms the shop environment to strengthen its ‘bakery food-on-the-go’ positioning.
It opened 24 new shops, including 17 franchised units in transport locations. The group closed 18 shops, giving a total of 1,656 shops trading at 25 April (comprising 1,594 of its own shops and 62 franchised units).
On 30 April It will open a test site with the Irish motorway service operator Applegreen, at a service area located on the M2 near Belfast.
The company said: “Working with franchise partners like Applegreen allows us to extend our offer to markets which were previously inaccessible to us and will help us to assess Northern Ireland’s appetite for our `Always Fresh. Always Tasty.’ Offer.
“Customers are clearly enjoying our improved range of freshly-made sandwiches, including Balanced Choice products offering healthier options with fewer than 400 calories. In the coming weeks we will grow our Balanced Choice menu through the introduction of upgraded salads, a summer berry fruit pot and our new own-label drinks range, which has been developed with no added sugar and includes `Juicy Water’ options containing one of your ‘five a day’ .”
The company said that breakfast continued to be an important driver of growth and it has added new options to its range. Its £2 breakfast meal deal now includes free range omelette sandwich combinations, as well as new porridge flavours and a ‘fruit and oatie’ cookie. It has also introduced a breakfast baguette which features in a £3 meal deal.
The Board has completed its review of the appropriate capital structure of the Group for the medium term.
As a result of this review and reflecting the views put forward the Board said it will adopt the following approach:
It will continue to prioritise investment in the business and maintain a net cash position. Given the leasehold nature of the shop portfolio, the Board does not currently believe that it is appropriate to take on structural debt.
It intends to maintain our progressive dividend policy, with a target that the ordinary dividend is two times covered by earnings.
It aims to maintain a year end net cash position of around £40m to allow for seasonality in our working capital cycle.
As a result of this review, the company said it will not carry out the proposed share buyback announced at the time of the group’s preliminary results. Rather, given the current strong cash position and expected cash requirements for the year ahead, the Board declares a special dividend of 20 pence per share, a distribution of £20m. This dividend will be paid on 17 July 2015 to shareholders on the register on 19 June 2015.
