Greggs, the high street baker and sandwich shop operator, has revealed a slowdown in like-for-like sales growth to 3.9% for the first 16 weeks of its year. The figure follows like-for-like sales growth of 5.8% for the first six weeks.
The quoted group said it had been affected by the “extremely poor” weather of August and early September.
Revealing an overall sales rise of 6.7%, the group said that in spite of increasing pressure on household budgets it had only seen a “modest erosion of customer numbers and transaction values”.
It did warn that it had reduced its operating profit forecasts for the current year by £3m as the result of slowing sales growth and pressure on margins.
The group, which operates 1,400 retail outlets under its eponymous brand and Bakers Oven, said the trend of substantial year-on-year increases in energy and ingredient costs continued to be a significant challenge.
It said that while the full impact of the increases had not been passed on to its customers as Greggs sought to reinforce its value-for-money positioning, it had seen a stabilisation in ingredient costs and reductions in some areas such as oils and vehicle fuel. This meant the outlook for margins was more positive.
It had opened 53 new shops and closed 22 units, and was on track to add at least 40 new shops over the year.
Greggs said that in the current environment it had decided to lower its total capital expenditure from £40m to £36m,which would include a significant investment in a new bakery in Manchester.
The company concluded: “The business enjoys significant fundamental strengths in today’s exceptionally challenging market and remains debt free and cash generative.
“The board is confident that Greggs’ consistent focus on providing great value for money to its customers and continued brand investment leaves the business well positioned for further growth.”
