Continued Progress at Greggs
Greggs, the leading bakery food-on-the-go retailer in the UK, increased sales by 7.3% to £453 million for the 26 weeks to 1 July 2017, as like-for-like sales in company-managed shops rose by 3.4%. Despite pressure from cost inflation, group operating profit before property gains and exceptional items grew by 1.8% to £27.6 million.
Greggs continues to see exciting potential for growth in its shop estate and opened 61 new shops in the first half of 2017 (including 24 franchised units) and closed 19 shops, giving a total of 1,806 shops (of which 181 are franchise units) trading at 1 July 2017. It opened its first ‘Drive-Thru’ shop at Irlam, Greater Manchester, in June and has been encouraged by its popularity, indicating a demand for further Drive-Thru locations.
Greggs also continued to expand the estate in the south-west of England and in Northern Ireland whilst adapting its formats to suit locations such as garage forecourts. The pipeline of new shop opportunities remains strong and Greggs expects around 100 net openings in the year as a whole.
Roger Whiteside, chief executive of Greggs.
Greggs also continues to make progress in the transformation of its shop estate with most shops trading in a food-on-the-go format. It updated 107 shops in the first half of 2017 as part of the shop refurbishment programme.
Greggs continued to invest in the transformation and development of its supply chain in the first half. Its Edinburgh bakery was closed in May, with production and logistics activities transferring to the Glasgow site where investment has been made to absorb the additional work. Greggs is now placing orders for the next phase of investment, the first of which will be the consolidation of cake and muffin production at its Leeds site.
Capital expenditure during the first half was £36.4 million (2016: £31.2 million) as Greggs progressed the investment in its supply chain alongside new shop growth and estate refurbishment. In the second half of the year the rate of shop refurbishment will reduce and Greggs will continue to invest in new shop openings and the transformation of its manufacturing and logistics capacity. As a result total capital expenditure in 2017 is projected to be approximately £80 million (2016: £80.4 million).
“The business has traded in line with our plans during the first half of the year,” points out Roger Whiteside, chief executive of Greggs. “We have made good progress with our strategic plans and remain confident of future prospects although we remain alert to short-term pressures on consumers’ disposable income. Over the year as a whole we expect to deliver results in line with our previous expectations as well as further progress against our strategic plan.”
