FDBusiness.com

Greggs, the UK’s leading bakery retailer with over 1,500 outlets throughout the country, has reported a 4.2% increase in group sales to £335m, including like-for-like sales growth of 0.4% in the 26 weeks ended July 2nd 2011. The sales growth was driven by a record number of new shop openings by Greggs.

Operating profit excluding exceptional items fell £1.2m to £17.3m. However, taking into account the £2m impact of additional public holidays in the first half, underlying operating profit rose by £0.8m.

“This was a creditable performance in the light of the very substantial increases in commodity prices during the half year, affecting most key ingredients as well as our energy-related production, retailing and distribution costs. This pressure was mitigated by our continuing drive to identify and unlock cost savings throughout the business,” says Ken McMeikan, chief executive of Greggs.

Ken McMeikan, chief executive of Greggs.

He continues: “Trading conditions have proved to be more challenging than we had expected and we do not anticipate that the second half will bring any alleviation of the tougher consumer spending environment with disposable incomes remaining under pressure. We continue to experience substantial increases in commodity prices and are continuing to work hard to mitigate the impact on customers through business efficiencies and targeted promotional activity.”

Greggs is continuing to open new shops and increased the size of its retail portfolio by 39 outlets during the first half and is on track for 80 net additions during the full year. The group also completed the construction of two new bakeries on time and on budget during the first half.

Total sales will benefit from the shop opening programme and Ken McMeikan believes that marginally positive like-for-like sales growth over the year as a whole is achievable.