Yahoo Finance British baker Greggs slows sales decline
By James Davey
LONDON (Reuters) - British baker and fast food retailer Greggs has slowed a sales decline caused by the coronavirus crisis but does not expect profits to return to pre-pandemic levels until 2022 at the earliest, it said on Wednesday.
Shares in Greggs, best known for its sausage rolls, steak bakes and vegan snacks, were up 8.8% at 0938 GMT on the improved trading and hopes of some recovery in 2021 on the back of the COVID-19 vaccine rollout.
A year ago Greggs was performing well and its shares hit a record high, but the pandemic hammered its business and its shares lost a quarter of their value in 2020.
“We’re optimistic because of the vaccines," CEO Roger Whiteside told Reuters. "The vaccines get rolled out, then progressively through the course of the year there will be an easing of restrictions to go alongside it."
Greggs' sales levels are heavily correlated with the extent to which customers are restricted in their ability to leave their homes.
The group, which cut 820 jobs late last year, said that like-for-like sales at company-managed shops in the fourth quarter to Jan. 2 averaged 81.1% of the equivalent 2019 level - an improvement from 71.2% in its third quarter.
However, Whiteside warned that new UK lockdowns are likely to stall that recovery.
The group still forecast a full-year pretax loss of up to 15 million pounds, against a 114.2 million pound profit in 2019, reflecting full-year sales of 811 million pounds, down from 1.17 billion pounds.
The pandemic has prompted Greggs to speed up innovations aimed at reaching more customers. Home delivery, in partnership with Just Eat, represented 5.5% of sales in company-managed shops in the fourth quarter.
Greggs said that 600 shops now provide delivery services and it expects this to increase to about 800 shops this year.
Despite the pandemic, Greggs opened a net 28 new shops in 2020, expanding its estate to 2,078, and ended the year with net cash of 37 million pounds.
It plans to open about a net 100 shops in 2021.
($1 = 0.7325 pounds)
(Reporting by James Davey; Editing by David Goodman)
