Greggs said that it had made a stronger-than-expected start to 2021 after seeing sales slip back last year as a result of the coronavirus pandemic.
The impact of the pandemic meant the baked goods peddler swung to a £13m loss, a huge flip from the £108m profit it made the prior year.
That beat the firm’s prior expectations of a loss of £15m. Shares in the firm rose 4.5 per cent as markets opened this morning.
The high street favourite said that sales had fallen from £1.2bn to £811m in 2020, with like-for-like sales down 36 per cent.
However, despite continuing restrictions Greggs said that it had seen a progressive recovery in sales in the second half of 2020, with momentum continuing into this year.
Shop sales are currently down 28.8 per cent for the year to date, but Scottish shops have been closed to walk-in customers for the majority of 2021 so far.
Excluding its Scottish estate, sales are down about 22 per cent in total.
Greggs added that 9.6 per cent of its sales so far this year had come through delivery – which is only available at around a third of its stores.
Despite the Covid-19 downturn, the FTSE firm continued to expand its bricks-and-mortar presence last year, opening net 28 new stores.
That now means its estate comprises 2,078 stores across the UK. It is planning to open 100 more stores this year.
Chief executive Roger Whiteside said: “Greggs has made a better-than-expected start to 2021 given the extent of lockdown conditions and is well placed to participate in the recovery from the pandemic.
“It has a clear strategy to extend its digital capabilities and to grow further in new locations, channels and dayparts. These opportunities will benefit all of its stakeholders in the years to come.”
The firm is sitting on a positive cash position, with an extra £100m made available through a new £100m revolving credit facility.
John Moore, senior investment manager at Brewin Dolphin, said: “On the back of lockdown, analysts had pencilled in a potential loss of up to £15m for Greggs; but the company has once against proven its resilience by beating expectations thanks to its careful, can-do attitude.
“The baker is in a strong cash position with access to ample liquidity and has used this period to upgrade processes and systems so that it can emerge stronger.”