Greggs bounces back
NEWCASTLE bakery chain Greggs swung to a loss in the first half of the year but says sales have returned to almost three quarters of normal levels since it reopened shops.
In half-year results, the food-on-thego giant said that sales last week reached 72% of where they were during the same week last year as it sites reopened up and down the country.
The bakery chain registered a £62.2m loss for the first six months of the year, compared with a profit of £36.7m last year. Sales were down 45% to £300.6m over the same period.
But it said the return of sales over the last three weeks had been encouraging and it hoped for more growth as society returned towards normality.
The company currently has around a quarter of its 25,000 staff on the Government’s Job Retention Scheme and chief executive Roger Whiteside was unable to rule out job losses as the furloughing process comes to an end in October.
He said: “We intend to make full use of the furlough scheme until the end of October. We took the view during lockdown that we would top up people’s pay to 100% when they were furloughed and we’ve tried to do the right thing throughout all of this.
“We want to give as much time as possible for demand to rise. At some point we’ll have to make a call on the level of demand and how many people we need to service that.
“That won’t be become clear until later but we employ people to serve customers. We have the right number of people to serve the customers we have now so we need more customers to come back so we get people back to serve them.”
The firm is accelerating its digital transformation and said it was is planning to launch click-and-collect and delivery services across the country to help increase sales.
Greggs reopened 800 of its shops for takeaways on June 18, while the rest of its stores began to gradually get back to work from July 2.
Bosses have slowed plans to open more shops under a growth strategy, though it expects to open around 60 and close 50 over the rest of the year. The chain is currently operating on a slimmed-down menu and said a return to its full offering would depend on whether enough customers returned. Plans for any new projects, and proposals to open some stores in the evening, have been delayed until next year. Mr Whiteside said: “Following successive years of unbroken growth, Greggs made a great start to 2020, coming into the year with momentum and clear strategic plans. The strength of our business model enabled us to secure the liquidity needed to support our business through the current crisis and then to adapt our operation and strategic investment plans in response to the new environment.”
Greggs is working to establish bank financing facilities for the second half of year, though this is expected to be lower than the £150m it secured from the Bank of England’s Covid business financing Facility in April. The company is not paying an interim dividend.