Greggs' roll goes soft as high street weakens

Catherine Neilan
Follow Catherine
Bakeries Feel The Pinch With Rising Costs Of Wheat
High street is going soft: hard cheese (Source: Getty)

Sales at baking chain Greggs have softened in the first 18 weeks of the year, reflecting the high street environment, as it enters consultation on three bakeries.

The figures

Total sales were up 5.7 per cent in the 18 weeks to 7 May - a slight deceleration on last year's 5.9 per cent growth - while like-for-likes were up 3.7 per cent, compared with six per cent during the same period in 2015.

"As has been widely reported, conditions on the high street were softer in March before recovering in recent weeks; these conditions were reflected in our own performance," the company, which is gearing up for its AGM tomorrow, said.

Why it's interesting

Greggs has been on something of a roll for the last couple of years, adopting a new healthier range called Balanced Choice and new products, which continue to go down well with customers, such as Teriyaki Chicken Noodle and Falafel with Humous. The introduction of the flat white to its coffee range helped Greggs' hot drinks arm to grow by double-digits.

The business is also continuing its shop refurb programme, with a further 55 shops carried out during the period and a total of 200 planned for 2016. In the year-to-date, 43 new shops have been opened, including 23 franchises, and 21 have been closed.

Although Greggs is still growing, and outlook suggests the full year will be in line with expectations, it is yet another company warning about the state of the high street. Clothing and homeware giant Next has twice flagged the weakening consumer environment, amid concerns that there could be a slowdown in spending.

Greggs today confirmed it has finished consultation over the closures of three bakeries, which come as part of a proposed £100m investment programme in its manufacturing and distribution operations.

The smallest site at Sleaford is now being closed and Greggs said it expected to close our Twickenham bakery in the fourth quarter of 2016 followed by Edinburgh in the second quarter of 2017.

What Greggs said

"Our people impacted by these proposals have demonstrated their commitment and professionalism during a difficult period and our focus now is to work with them individually to ensure that we manage these changes in line with Greggs' values as a responsible employer," the FTSE-250 listed company said.

The company added: "We have made a good start to the year. Input cost inflation remains low despite increased wage costs and, with a strong pipeline of product initiatives and plans to invest in our shops and supply chain, we expect to make progress in line with our previous expectations."

In short

With another high street player flagging pressures on the high street, it seems times could get tough for retailers and leisure companies.

Related articles