Greggs slashes outgoings

Greggs is completely shutting its entire estate in order to protect its people and customers, it has announced.

The food to go operator will close its shop estate by close of business tomorrow (24 March), saying it needed to go further to aid the fight against coronavirus.

Greggs had already converted all of its shops to take-away, accepting card payments only, while advising customers to follow social distancing guidelines while waiting to be served.

The group said the Government’s Coronavirus Job Retention Scheme would allow it to maintain employment of colleagues at full contract hours for as long as is practicable.

Remaining unsold food will be distributed to those in hardship through the Greggs Foundation.

Greggs said last week company-owned shop like for likes had seen a 9.9% decline, with the rate of decline increasing each day as customers heed government advice on social distancing.

The company said it has maintained a strong balance sheet, and at the end of this week expects to have £60m in the bank, having made normal payments to staff, suppliers and landlords, including March quarterly rent payments.

Greggs plans to remove £45m from this year’s planned capital expenditure programme, has suspended its final dividend for 2019 and stopped share purchases via its Employee Benefit Trust, avoiding a further £40m of cash outgoings this year.

With the closure in place for a potentially prolonged period, Greggs’ weekly cash outgoings are estimated to be £5m, assuming government relief for business rates and employment support is available to maintain all jobs.

The retailer will be asking landlords to accept a monthly, as opposed to quarterly, payment basis from June.

The company said it will apply for support from the Covid Corporate Financing Facility (CCFF) scheme.

Greggs CEO Roger Whiteside OBE said: “Whilst the outlook during this crisis remains uncertain Greggs is a resilient business with strong growth credentials and we should be confident of its ability to navigate this event and return to growth when the economy recovers.”