Greggs, the high street sandwich chain, this morning reported a 20% drop in pre-tax profit to £12.5m on flat like-for-like sales and rising energy costs.
During the first half like-for-like sales under the Greggs brand reported a decline of 0.3%, while those under the Bakers Oven brand rose by 0.8%.
Total sales were up by 3.1% to £243.1m. Energy costs were up by £2.4m, or 69%.
Operating profit was £11.4m, down 19.7%, in line with the board's expectations.
Like-for-like sales for the first four weeks of the company’s second half were up 1.4%, however, this was offset by a decline of 2.6% in the two weeks to 29 July.
Sir Michael Darrington, the company’s managing director, said: "We expect our operating results in the second half to be closer to those of the comparable period of last year, subject to market and weather conditions.”
The company said it had returned £38.7m to its shareholders to date through its share buyback programme, which it intends to continue.
In total, the company has to date acquired for cancellation 1.016m ordinary shares, at an average price of £37.83.
Since the beginning of its second half the company has spent a further £10.5m purchasing for cancellation 264,997 ordinary shares at an average price of £39.56.
The group has opened 22 new sites and closed six since 1 January, taking it to an estate of 1,335. The company plans to open around new 20 shops this year.
The company also announced it was to integrate its Baker Oven divisions in the North and Scotland into the Greggs brand, due to “the unsatisfactory performance of the divisions over a number of years”.
The group plans to transfer 49 of the 63 Baker Oven outlets in the regions to Greggs divisions in the North East, Yorkshire and Scotland, where they will be rebranded as Greggs.
Fourteen poorly performing outlets will be closed, with the company expecting to incur closure cost of £2.5m. However, it expects the restructuring to enhance annual profit by approximately £1.25m in its next financial year.
