Yahoo Finance Greggs set to make first annual loss since 1984 as pandemic hammers sales
A new delivery partnership with Just Eat has helped the company claw back some lost in-store revenues
(Greggs/North News & Pictures Ltd)Bakery chain Greggs has warned it will slump to its first annual loss since 1984 as the coronavirus pandemic hits sales at its high street branches.
The Newcastle-based company said total sales in the year to 2 January had dropped 31 per cent to £811m and it does not expect to return to profit until 2022.
It added government support had been essential in minimising losses which are forecast to come in at £15m.
Greggs cut 820 staff in the final three months of the year as a wave of new restrictions were introduced.
A new delivery partnership with Just Eat has helped the company claw back some lost in-store revenues and now accounts for 5.5 per cent of sales in company-managed stores.
Around 600 of its shops now provide delivery services to catchments served by Just Eat and this is expected to increase to around 800 shops in 2021.
Greggs said: “The significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance.
“However, we do not expect that profits will return to pre-Covid levels until 2022 at the earliest.”
Despite the profit warning, Greggs share price rose 10 per cent on Wednesday as the expected losses came in lower than expected.
The group also confirmed it still hopes to add another 100 stores next year.
Chief executive Roger Whiteside said: “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.
“We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well.”
Julie Palmer, a partner at insolvency specialists Begbies Traynor, said the latest national lockdown was unwelcome news for Greggs as many of its customers would be working from home.
She added: “The bakery chain has had to adapt its business model and invest digitally to accommodate for the rapid change in shopping habits, offering click-and-collect purchases, as well as a nationwide delivery service through its partnership with Just Eat.
“This should provide a solid base for the business to expand when government restrictions are eased and the world returns to some normality.”
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