Shop closures during the pandemic have knocked Greggs to its first ever loss but it has said that its growth opportunities are “as good if not better” than a year ago.
The bakery chain, which is known for its sausage rolls and steak bakes, recorded a £13.7 million loss for the year to January 2 compared with a £108.3 million profit the previous year.
The loss is smaller than the £15 million Greggs warned of in January and considerably better than the £67 million loss predicted last year when it said that a steep fall in customer visits and closures would result in a fall to the red for the first time since it listed in the 1980s.
Sales at Greggs slumped by 30.5 per cent to £811.3 million and like-for-like sales — those at shops open for a year or more — fell by 36.2 per cent. Like-for-like sales for the first ten weeks to March 13 have improved to be down by 28.8 per cent year-on-year.
Roger Whiteside, 62, chief executive, said: “Greggs is well placed to participate in the recovery from the pandemic and has demonstrated its resilience and capability to operate under such challenging conditions.”
Greggs’ financial hit from the pandemic was softened by government support, including the Bank of England’s financing facility to issue £150 million. It furloughed most of its staff and received business rates relief, which it said helped to “mitigate the impact of Covid and protect as many jobs as possible”.
The bakery group was founded as a delivery business on Tyneside by John Gregg in 1939. The chain, which has 2,078 shops and 25,000 employees, cut 820 jobs in November after asking staff to reduce their hours to reflect the steep fall in trade during the pandemic.
It said it would still invest in a £9 million automation programme at one of its factories in Newcastle and would continue to target having 3,000 shops in the years ahead.
Greggs is expected to claim a number of vacant high street sites that have been left behind by struggling retailers as it sticks to its ambitions of 100 openings a year. Ben Hunt, analyst at Investec, said: “Management also sees new opportunities to open stores in central London and mass transport hubs, where lower rents are making locations more attractive.”
During the crisis Greggs accelerated its digital business with a click and collect service and delivery partnership with Just Eat, the takeaway firm. Deliveries are now available from 600 shops and accounted for 5.5 per cent of group sales in the fourth quarter. The baker said: “Digital channels are increasingly contributing to the recovery of sales levels and opportunities for estate growth appear to be as good, if not better, than they were a year ago.”
Greggs is facing looming boardroom changes, which have been delayed by the crisis. Ian Durant, chairman, 62, said that he would have ordinarily stepped down last year after ten years with the business but he had been asked to stay on “to provide continuity of leadership during a period when we are likely to address CEO succession as Roger Whiteside approaches retirement age”.
The business said its dividend was a “casualty of the need to preserve cash” and that the baker would need to return to a level of profitability and cash generation to support its investment programme.