Rising costs worry Greggs
Sales strong for bakery group
High street baker Greggs is seeing healthy sales growth, but is feeling the effects of rising costs.
The group, which operates the Greggs and Bakers Oven brands and specialises in sandwiches and takeaway products, said that selling price inflation, which averaged 2.1 per cent in the first half, is currently 2.4 per cent, and it expects this upward trend to continue.
In a trading update, Greggs said its labour costs are rising as it responds to upward pressure on wages in the retail sector, and it is also seeing significant increases in the costs of energy and ingredients.
The group has seen total sales growth of 9.8 per cent in the 18 weeks to October 16, with like-for-like sales up 6.2 per cent. Group managing director Sir Michael Darrington said that, as expected, like-for-like sales growth slowed from the 7.4 per cent seen in the first seven weeks of the trading period, which reflected comparisons with the heatwave of summer 2003. Like-for-like growth has averaged 5.4 per cent over the past 11 weeks.
Greggs has added 24 shops to its 1,200-plus estate in the year to date, and expect to beat its target of 30 by the year end.
[img r]greggsmikedarrington.jpg[/img]Darrington ([i]pictured[/i]) said: “Our budgets assume that like-for-like sales growth will trend gently downwards over the remainder of this year, reflecting the steadily strengthening comparative performance in 2003. Profits to date are in line with our expectations, and we continue to look forward to reporting satisfactory progress over the year as a whole.”
