Greggs Delivers Record Underlying Profits For 2014
In 2014, Greggs, the UK’s leading bakery food-on-the-go retailer with 1,650 retail outlets, began to implement a strategy to focus the business more on the growing food-on-the-go market, with a focus on customers and product innovation. This approach has delivered encouraging initial results.
Greggs has reported a 5.5% increase in sales to £804.0 million, a rise of 4.5% on a like-for-like basis for the 53 weeks ended 3 January 2015.
Operating profit before exceptional items grew by 40.0% to £58.1 million. The result reflects good like-for-like sales growth, particularly in the second half of the year, strong returns on investments in shop refurbishment and excellent cost control in Greggs’ operations following structural changes.
Pre-tax profit before exceptional items was £58.3 million – an increase of 41.1%.Greggs incurred an exceptional charge of £8.5 million reflecting one-off costs resulting from structural changes in its supply chain and support areas. Operating margin before exceptional items was 7.2% up from 5.4% in 2013.
“2014 was a year of significant change and an exceptional step up in performance for Greggs as we began to implement our new strategic plan centred on the growing food-on-the-go market,” says comments Roger Whiteside, chief executive of Greggs. “We have improved both our food offer and the shop experience for customers. Market conditions have been more favourable and like-for-like sales have grown throughout the year. This has resulted in record underlying profits for the financial year. Overall we are confident of delivering a further year of good growth and progress against our strategic plan in 2015.”
Greggs invested a total of £48.9 million of capital expenditure in the business during 2014. This included expenditure on 213 shop refurbishments and the opening of 30 new shops (excluding franchises). The bakery group also invested £3.9 million in its programme of process and systems improvement. Investment in the supply chain continued to be focused on efficiency activity and the replacement of end-of-life assets.
Following the success of its 2014 capital investment programme, Greggs plans capital expenditure of around £65.0 million in 2015. As in 2014, the company will prioritise investment in its core estate and on the upgrading of its process and systems platform. Greggs plans to refurbish 200 to 220 shops in 2015 and expects to invest in 60-70 new shops.
