Greggs will swing to a full-year loss of up to £15m due to the impact of coronavirus lockdowns on trading, the high street bakery chain announced this morning.
The company, which has cut 820 jobs due to the crisis, said the drop in demand means it expects to report a loss before tax for 2020 compared to profit of £108.3m in 2019.
However shares jumped more than eight per cent this morning as investors were encouraged by Greggs’ performance in comparison to its competitors.
Greggs said sales in the fourth quarter of the year reached £293m, down from £344m the previous year, amid “variable trading conditions” in the UK after the government implemented a coronavirus tier system.
Company-managed shop like-for-like sales were at 81.1 per cent of the 2019 level, with delivery sales through Just Eat accounting for 5.5 per cent of transactions.
600 Greggs branches provide delivery services, which will be increased to 800 stores this year to capitalise on the shift towards at-home ordering.
The cafe chain said trading in December was “initially more robust” after the England-wide lockdown was lifted at the end of November.
However new restrictions introduced later in the month dampened sales.
In the five weeks to 2 January sales have averaged 85.7 per cent of 2019 levels.
Greggs’ chief executive Roger Whiteside said the impact of Covid-19 has been “enormous”, but the business is resilient.
“With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking,” Whiteside said.
“We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well.
“In light of the recent Government announcements significant uncertainties remain in the near-term.
“We have taken action to position Greggs to withstand further short-term shocks and are optimistic about our prospects for growth once social restrictions are lifted. I want to thank everyone who has supported Greggs through 2020.”