North East bakery chain Greggs says its expansion plans will continue in 2021 with 100 planned openings – despite bracing itself to post its first ever loss in its 80-year history
The Newcastle food-on-the-go favourite has warned that its profit levels will not recover until at least 2022, having taken a hammering during the pandemic, which also led to the loss of 820 jobs at the end of last year.
However, CEO Roger Whiteside said the company has shown its resilience bu establishing new, safe ways of working to protect staff and serve customers, and that it is optimistic for the future, which it is demonstrating by continuing to invest in its digital channels and physical stores.
The group said average like-for-like sales were back up to 81.1% of its 2019 levels over its fourth quarter, running to January 2. It took in total sales of £293m compared to 2019’s £344m, and over the last five weeks had recovered to 85.7% of last year’s performance.
It is braced for annual pre-tax losses of up to £15m, against profits of £108.3m the previous year, though it said the hit was contained thanks to Government support, and that total sales for the 53 weeks to Jan 2 slumped by 30.5% from £1.168bn to £811m,
Despite the falling sales, Greggs continued to grow its estate over the year, opening 84 new shops - including 35 franchised units - and closing 56, growing the estate to 2,078 shops as of January 2.
It said while there was “significant uncertainty” over the outlook due to ongoing lockdowns and Covid-19 measures, it was not expecting profits to recover to pre-pandemic levels for another two years “at the earliest”.
Looking ahead, the company said it was maintaining a strong financial position, developing new ways for customers to shop and that it expected to open 100 stores in the year ahead “subject to prevailing market conditions”, especially those in retail parks and drive-thrus.
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Mr Whiteside said shops accessible by car, especially those at retail parks, had held up particularly well even when coronavirus restrictions have been tight, with sales per store reaching around 90% of 2019 levels.
He said Greggs is particularly under-represented in central London - and that a new opening has been made in St Pancras International Station, which he expects to do particuarly well when the restrictions are eased and more people once again begin travelling on public transport - news which will be welcomed by North East commuters who typically travel from neighbouring Kings Cross.
Meanwhile, he said the firm’s well-established partnership with Iceland had reaped rewards as more people were snapping up steak bakes, sausage rolls and its other Iceland products on a more regular basis.
As a result, it is looking at “more opportunities” with Iceland - starting with Greggs vegan sausage rolls which will go on sale in Iceland stores this month.
Mr Whiteside added: “In a year like no other I am enormously proud of the way in which our team has risen to the challenges we have faced, whilst looking after the interests of all stakeholders and providing support for communities.
“Whilst the impact of Covid-19 has been enormous, we have established working practices that allow us to provide takeaway food services under the different levels of restrictions we have experienced.
"The breadth of Greggs’ customer base provides ongoing demand for our services which, combined with our diverse geographical spread, has demonstrated the resilience of our business.
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“With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking. We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well.
“In light of the recent Government announcements significant uncertainties remain in the near-term. We have taken action to position Greggs to withstand further short-term shocks and are optimistic about our prospects for growth once social restrictions are lifted.”