Yahoo Finance Greggs blames 'beast from the east' for weaker profits
Greggs has warned of worse-than-expected profits after the “beast from the east” storm hit sales.
The Newcastle-based firm, which has about 1,900 shops across the UK, said the bad weather kept shoppers off the streets – and away from its sausage rolls and steak bakes. The chain was also up against strong comparative performance in the same period of 2017.
In an update for the first 18 weeks of 2018, Greggs said it was expecting the full-year profit to be about the same as last year’s £81.8m. City analysts had been forecasting £87m and Greggs’ shares slumped 15% to £10.80.
The bakery chain suffered disruption during the snowstorms, with delivery vans struggling to reach their destinations and staff unable to make it into work, particularly in Scotland and parts of Wales, which experienced the worst of the weather.
“For a period of about 10 days we were significantly disrupted, with a double-digit decline in sales in that period,” said the chief executive, Roger Whiteside. Lost sales would not be made up, he said, because “people don’t come in and have two lunches the week after”.
However, he admitted the poor weather was not solely to blame for the downturn. More recent sales had been better than March and April but were still behind January and February “so there is an underlying trend there”.
He said that while average customer spend had increased to about £3 because of the Greggs meal deal offers, fewer customers were coming through the door, reflecting the general weakness on the high street.
Sales growth at shops open for more than 12 months slowed to 1.3% in the first 18 weeks of the year, from 3.5% over the same period in 2017.
Greggs said its breakfast and hot food menus were proving popular among customers. The chain said sales of healthier options have also continued to grow as it has extended the range on offer for the summer.
Whitehead said the bakery chain benefited from the warmer weather at the beginning of last week as it coincided with the launch of its summer menu – but then the temperatures rose too high. “When it gets to about 25 degrees-plus, people don’t go out, they tend to stay in their gardens and entertain in a different way. So it was a mixed week.”
