Greggs Makes Good Progress in First Half as Transformation Continues
Greggs, the leading bakery food-on-the-go retailer in the UK, has reported a 6.0% rise in revenue to £422 million, with like-for-like sales in company-managed shops up by 3.8%, in the first half ended 2 July 2016. Operating profit before property gains and exceptional items grew by 6.7% to £27.2 million.
Greggs is continuing to invest in the transformation of its shop estate and in the first half completed 86 shop refurbishments to its latest ‘bakery food-on-the-go’ format. Over the year as a whole Greggs plans to update around 200 shops. In the first half of 2016, the company also opened 68 new shops (including 31 franchise units) and closed 36 shops, giving a total of 1,730 shops (of which 136 are franchise units) trading at 2 July 2016. Greggs expects to open around 70 net new shops over the year as a whole.
The retail bakery group’s plans to invest in the transformation and development of its supply chain are progressing well. The new distribution facility in Enfield will be operational in October allowing the full closure of the existing Twickenham bakery in the fourth quarter as planned. In addition, planning permission has been secured for the extension of Greggs’ Clydesmill bakery in Glasgow which will facilitate the closure of the Edinburgh bakery during the second quarter of 2017, as previously announced. Greggs is now planning the next phase of investment in its remaining sites, which will increase logistics capacity and consolidate manufacturing, with benefits in product quality, consistency and efficiency.
Capital expenditure during the first half was £31.2 million against £31.3 million in the corresponding period in 2015. Total capital expenditure in 2016 is expected to be approximately £85 million, up from £71.7 million for the previous year.
Roger Whiteside, chief executive of Greggs, comments: “In the first half of 2016 we delivered good like-for-like growth by reinforcing the freshness and value of our offer in line with changing trends in the food-on-the-go market. We added to our ‘Balanced Choice’ range with sales growing strongly as more and more of our customers recognise the quality, range and value we offer in these healthier food choices.”
He adds: “We have made an encouraging start to the second half of the year and are alert to any change in consumer demand that may result from the current economic uncertainty. Overall, we expect to deliver full-year growth in line with our previous expectations as well as further progress against our strategic plan.”
