Greggs, the food-to-go retailer, has warned that, despite record profits last year, storms that hit the UK last month have caused a “significant” slowdown in sales.
The Newcastle-based high street food chain said that the stormy weather, which caused widespread flooding across the UK, had forced it to shut a supply site in south Wales temporarily and had hit customer demand. The group warned that the potential impact of coronavirus meant that the outlook for 2020 was “uncertain”.
However, it said that it would tackle the challenges from a “strong financial position” after a record-breaking performance in 2019. Overall, total sales for the year to the end of December were up 13.5 per cent to £1.17bn, in line with analysts’ forecasts. Pre-tax profits, excluding a pre-tax charge of £5.9m related to supply chain restructuring, rose 27 per cent to £114m.
Following the announcement of a £7m one-off payout to staff in January, the company said it would consider a special dividend to shareholders at its interim results in July.
Greggs has transformed itself from a purveyor of bread and buns into an on-the-go food retailer as consumers searched for quick and easy meal options. It has invested heavily in its vegan ranges and launched a vegan hot cross bun to accompany its vegan “sausage” roll and vegan “steak” bake last month.
The company said it expanded its store estate to 2,050 sites last year — a total of 97 net openings — but added that it was targeting transport hubs and office estates rather than traditional high streets. It estimated that it controls around 5 per cent of the UK’s food-on-the-go market and said that it was developing its supply chain to cope with an estate of around 2,500 shops.
It is experimenting with hot food cabinets in order to capture the post-work commuter market and signed an exclusive deal to offer takeaway options with Just Eat in January.
Roger Whiteside said that 2019 had been an “exceptional year of progress” for Greggs but added: “Cost increases are likely to present a stronger-than-normal headwind in 2020, with wages and pork commodities driving cost inflation. We intend to invest some of the margin generated by our strong performance in 2019 to protect customers from these costs.”
Shares in Greggs fell 0.4 per cent in early London trading on Tuesday.
