Greggs share price edges up as it serves up £20m special dividend

Emma Haslett
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Things were beginning to look crumby for Greggs - but then posh sandwiches helped to turn things around (Source: Getty)

The figures

Proof of the might of the humble sausage roll: bakery chain Greggs said like-for-like sales rose 5.9 per cent in the first 16 weeks of the year, up from 3.8 per cent during the same time last year.

It's completed 69 shop refurbishment, and plans to refit a total of 200 to 220 stores this year. It also opened 24 new shops, putting its total at 1,656. Basically, you're never far from an iced bun.

As a result of all this activity, the chain served up a special surprise for its shareholders: at £20m - or 20p per share special dividend. That got investors interested: shares rose two per cent to 1,098.4p in early trading.

Why it's interesting

Greggs had a delicious financial crash, but then things started to get crumby: in January last year, the chain announced plans to close all its remaining in-store bakeries and massive cutbacks on 400-odd jobs at its Newcastle headquarters. Then there was the unfortunate incident during which its logo was changed to something rather unpleasant on Google.

But its turnaround strategy - which included a focus on fresh coffee and posh sandwiches - seems to have worked. This January it said like-for-likes had grown 4.5 per cent in the year to the end of 2014.

So things are looking up - for Greggs and its investors. And its customers, who now get "free range omelette sandwich combinations" as part of its £2 breakfast meal deal. Bargain.

What Greggs said

The strong start to 2015 has been supported by rising consumer disposable incomes and low input cost inflation. We expect market conditions to remain favourable and support a good first half performance, ahead of our previous expectations. In the second half of the year we will come up against stronger sales comparables and a less certain cost outlook. However we expect to deliver good growth for the year as a whole and further progress against our strategic plan.

In short

How to turn around an ailing bakery chain? Posh sandwiches and breakfast omelettes are a recipe for success, apparently.

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