Greggs sees fall in pre-tax profit despite rise in sales
Bakery products retailer Greggs has reported a fall in pre-tax profits despite a rise in total sales.
In the year ending 29 December, pre-tax profit before exceptional items fell 2.2% to £51.9 million. Like-for-like sales dropped 2.7% as shopper footfall declined and trade was impacted by the exceptionally wet weather during the year.
However, total sales increased by 4.8% to £735 million as the retailer opened more shops and expanded its wholesale business. Wholesale and franchise sales contributed 2.8% points to sales growth.
Greggs said 2012 trading was very challenging with like-for-like sales coming under pressure throughout the year. As a result, the retailer focused on offering value to customers and increased its investment in promotions, particularly in its popular meal deals. While meals deals generated strong sales, sales of Fairtrade coffee continued to grow with 21 million cups sold in the year, an increase of 23%.
Never Miss a Retail Update!The retailer’s traditional categories were boosted by sales of new products such as the chicken tandoori baguette and raspberry cupcake. New ranges of sandwich and cupcake platters were also successfully launched in 2012, priced from £6 to £12.50.
Greggs opened 121 new shops in 2012 to give a net increase of 100 after 21 closures. Almost half of the new openings were in locations such as retail and industrial parks, motorway service stations and travel hubs. The new stores included ten new franchised shops in motorway service stations launched in partnership with Moto Hospitality.
The retailer said its new local bakery format “Greggs the Bakery” had been successful and would be extended to a further ten locations by the end of the year. In addition, the ”Greggs Moment” coffee shop concept, now operating in five locations, would be expanded to three new outlets in the Midlands.
Greggs said its success in selling a range of frozen products in Greggs branded cabinets in Iceland stores had shown that it could compete in the ‘bake at home’ market, taking market share from existing packaged brands.
Chief executive Roger Whiteside said: “Success in our new business channels coupled with new shop openings saw total sales growing again this year despite challenging market conditions.
“We have reshaped our plans for 2013 to focus on our core estate by increasing investment in our successful new formats in ‘food on the go’ and ‘local bakery’. At the same time we will continue to develop sales through new shop openings, and make further progress in new markets through our wholesale and franchise agreements.”
