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By James Davey
LONDON (Reuters) - Bakery and fast food chain Greggs defied the gloom on Britain's shopping streets on Tuesday by adding another 500 shops to its store target, despite plunging to the first annual loss since its 1984 listing due to the COVID-19 pandemic.
Shares in Greggs, best known for its sausage rolls, steak bakes and vegan snacks, were up 4.6% at 1010 GMT, close to all time highs and extending gains this year to 29.5% after it reported a better-than-expected start to 2021.
“People are looking through COVID to what lies beyond and whether they see Greggs being able to return to growth. We certainly feel that we are well positioned for that and that's why we're going to add more shops," CEO Roger Whiteside told Reuters, lifting the group's target to 3,000.
As of Jan. 2, Greggs traded from 2,078 outlets.
Non-essential shops have been closed in Britain in a third national lockdown, piling more misery on the retail industry. Chocolatier Thorntons said on Monday it would permanently close all 61 of its UK stores.
While Greggs' shops have been able to stay open, the pandemic has shattered its business model, which relies on a high volume of shop visits.
Total sales fell 31% to 811 million pounds ($1.1 billion) in the year to Jan. 2, and the group slumped to a pretax loss of 13.7 million pounds from a record profit of 108.3 million in 2019.
Like-for-like sales in company managed shops were down 36.2% year-on-year in 2020, but down 28.8% in the ten weeks to March 13. That figure improves to down 22.4% if Scotland, where shops have been closed to walk-in customers for the majority of the year to date, is excluded.
The pandemic prompted Greggs to speed up innovations aimed at reaching more customers. Home delivery, in partnership with Just Eat, represented 9.6% of sales in the ten week period.
Greggs is now delivering from over 600 shops, while Click & Collect has been rolled out to all shops. A dinner menu for home delivery is being tested.
"The shares ... expect a very swift bounce back: we don’t think it will be quite as easy or as quick as that and with the shares on a multiple more akin to a nascent dotcom retailer, we think they are overvalued," Peel Hunt analysts said.
($1 = 0.7217 pounds)
(Reporting by James Davey. Editing by Louise Heavens and Mark Potter)