Member Article

Profits slide at Greggs after £8 million restructuring costs

High street bakers Greggs have reported a fall in profits from £52 million in 2012 to £33 million in 2013, caused by declining sales and the costs of a restructuring programme.

The firm spent £8.1 million on closing nine loss-making shops and restructuring the “Greggs Moment” coffee shops, as well as changes to its supply chain.

Publishing its preliminary results for 2013 Greggs noted like-for-like sales were down 0.8% and said market conditions continued to be “challenging.”

Competitors in the £6 billion a year food-on-the-go market, including convenience supermarkets, coffee shops and fast food operators, have challenged Greggs’ market share.

The firm said the growing importance of breakfast among consumers had driven growth of its £2 breakfast deal, and new product lines, including pizza and ‘heat to eat’ sandwiches, had performed well.

As online shopping continues to grow, Greggs said it intends to pull out of underperforming high streets, although it is looking to open 60-80 new shops in 2014.

To coincide with its results the brand has also launched its ‘Greggs Rewards’ scheme, a digital points scheme that customers collect and use via an iPhone App.

Commenting on the results, Greggs chief executive Roger Whiteside said: “2013 was a year of transition for Greggs as our new strategic focus centred on the growing food-on-the-go market.

“Whilst total sales for the year rose 3.8% like-for-like sales were down 0.8% reflecting the tough and competitive trading conditions. However, I am encouraged by the improvement in performance in recent months as our new strategic focus started to deliver benefits.

“Market conditions are expected to remain challenging in 2014. It will be a year of further change for Greggs as we move forward with our plan to focus on the food-on-the-go market and build on positive recent trading momentum.”

This was posted in Bdaily's Members' News section by Tom Keighley .