Greggs, the high street bakery and café operator, has this morning reported a 1.4% increase in like-for-like sales for the year to the end of December 2011, but reported a drop in performance for the first 10 weeks of its current financial year.
The c1,570-strong group reported record sales of £701m during the year, a rise of 5.8%. It said that the like-for-like sales increased of 1.4%, was slightly ahead of its expectations of marginally positive like-for-like growth over the year as a whole.
Operating profit before exceptional items climbed 1.2% to £53m, while pre-tax profit before exceptional items rose 1.1% to £53.1m.
It said that as expected, there had been a slow start to 2012, impacted by a strong performance in January last year and the adverse weather experienced in some parts of the country.
Total sales for the first 10 weeks of the current financial year to 10 March 2012 climbed 3.3%, however like-for-like sales declined by 1.8%.
The group said it was too early to tell if this slower start was a sign of a more prolonged trend in sales, however “we have managed costs well through this period and our profit performance remains on target”.
The company added a record number of sites during the year, 84, including the opening of its 1,500th site in York in March 2011. It said it plans to continue its investment in shop expansion and refurbishments in the current year, adding around 90 new shops, net of closures, by the end of 2012, and refitting a further 100-120 shops.
It launched its new coffee shop concept Greggs Moment in Newcastle upon Tyne last year. The company said it had been well and on the back on this, it will open three more outlets this year under the format as it continues to “pursue the opportunity presented by the growing coffee shop market”.
In October, Greggs announced a move into the motorway services market through a trial with Moto Hospitality Limited. The first franchised Greggs shop opened at Lymm services in Cheshire in January 2012, which the group said was performing well. It plans to explore further opportunities to open shops in partnership with Moto in the year ahead.
During 2011, the group completed two major investments in it supply chain, with the commissioning in September of new bakeries in Newcastle upon Tyne and Penrith. Its £16.5m Gosforth Park bakery in Newcastle replaces an older bakery in the city, while its £4.5m Penrith bakery is a specialist confectionery facility supplying shops throughout the country. Both new bakeries were completed on time and within budget.
The group said it expects to achieve its targeted £10 million of annual savings two years ahead of schedule in 2012. However, it said it would not be making the same level of investments in it supply chain over the next 12 months that have been a feature of the last two years.
Ken McMeikan, chief executive said: “This will undoubtedly be another challenging year for UK consumers, with disposable incomes expected to continue contracting well into the second half. However, the severe inflationary pressure on fuel, domestic energy and food costs that the consumer suffered in 2011 is not expected to continue at the same level, and sentiment should benefit from major national events including the Diamond Jubilee celebrations, the London Olympics and the Euro 2012 football championship. We are planning to make the most of these opportunities while focusing throughout the year on maximising our customer appeal through continued product innovation and promotional activity.
“Total sales this year will benefit from the opening of around 90 net new shops, creating a further 700-800 new retail jobs and making Greggs even more accessible to customers across the UK. We will also continue to drive our programmes of efficiency improvements throughout the business. Our strategy for long-term growth is well on track, and I believe that 2012 will be a year of further progress for Greggs.”
