Greggs reports its first loss in 36 years
BUSINESS: Bakery firm Greggs has sunk to its first loss in 36 years as the Covid-19 pandemic hit one of the stalwarts of the high street.
Bosses announced a pretax loss of £13.7m in 2020, compared with a £108.3m profit a year earlier, with sales dropping from £1.17bn to £811.3m as stores closed in lockdown.
BAKERY FIRM Greggs has sunk to its first loss in 36 years as the Covid-19 pandemic hit one of the stalwarts of the high street.
Bosses at the chain announced a pre-tax loss of £13.7m in 2020, compared with a £108.3m profit a year earlier, with sales dropping from £1.17bn to £811.3m as stores closed their doors for large swathes of the year.
But the company said it remains positive for the future and has committed to opening 100 new stores this year.
Delivery services and a partnership with Just Eat helped offset some of the falls, the company said, with 9.6 per cent of total sales in the first ten weeks of 2021 now coming via deliveries.
But the latest lockdowns and restrictions since the start of the year have hit overall sales, the company said, with like-for-like sales down 28.8 per cent in the ten weeks to March 13. Stores have remained open for takeaways, as they are classed as essential retailers, however city centre locations and travel hub sites have seen substantial falls due to the stay-at-home Government orders.
Excluding sales in Scotland, where stores have been closed to walk-in customers for the majority of the year, like-for-like sales were down 22.4 per cent during the period. The company said the results for 2020 were slightly better than expected, considering the lockdowns, adding that it benefited from the furlough scheme and business rates holiday.
Bosses added they have access to a new £100m revolving credit facility to fund further expansion beyond the 2,078 stores in operation.
Greggs listed on the London Stock Exchange in 1984 and had never previously reported a loss since becoming a public company.
Richard Hunter, head of markets at interactive investor, commented: “The pandemic clearly left its mark on Greggs, but its shares nonetheless remain on a roll.
“The various lockdowns tested the company’s resilience to the full, and the pre-tax loss for the year of £14m compares with a previous profit of £108m.
“However, broken down into two distinct halves, the direction of travel has clearly improved with a first-half loss of £65m largely offset by a second-half profit of £51m.
“With the worst hopefully over and with a lean model to move into the next phase, Greggs seems well positioned.”
EUROPEAN markets climbed higher after the European Medicines Agency sought to calm concerns over the Oxford/AstraZeneca coronavirus vaccine.
London traders welcomed the agency’s statement that it “remains convinced” that the “benefits of this vaccine outweigh the risk” after a number of EU countries suspended its use on Monday.
The FTSE 100 closed 53.91 points, or 0.8 per cent, higher at 6,803.61 on Tuesday.
Connor Campbell, financial analyst at Spreadex, said: “Positive comments surrounding the Oxford/AstraZeneca vaccine appeared to give Europe a boost, despite a slow start from the US. “Following Monday’s suspension of the preparation in France, Germany and Italy, the European Medicines Agency has stated there is ‘no indication’ the small number of blood clotting cases seen by people who have received the vaccine were caused by the dose itself. “Benefiting from AstraZeneca’s own increase, as well as cable’s decline, the FTSE rose to around 6,800.”
German stocks were particularly strengthened by the announcement, with the Dax sitting just short of a new record high.
The German Dax increased by 0.69 per cent and the French Cac moved 0.32 per cent higher.
Across the Atlantic, the major markets opened with minor gains as traders assessed updates regarding the vaccine.
US markets also appeared to be cautiously waiting for further clarity on the direction its economy could take ahead of the Federal Reserve’s meeting on Wednesday.
Meanwhile, sterling lost ground on a dollar which benefited from some positive US retail data on Tuesday afternoon.
The pound decreased by 0.04 per cent versus the US dollar to 1.388 and was up 0.22 per cent against the euro at 1.167.
In company news, Natwest Group dipped in value after the City watchdog launched criminal proceedings against the taxpayer-backed firm for alleged failures under money laundering rules.
The Financial Conduct Authority (FCA) alleges that “increasingly large cash deposits” were made into a NatWest customer’s account, with around £365m paid in - of which some £264m was in cash.
Shares slid by 2.75p to 185.7p on Tuesday.
High street baker Greggs saw shares lift after it struck an upbeat tone with investors over plans to continue its expansion despite slumping to its first loss in 36 years.
The Newcastle-based company announced a pre-tax loss of £13.7m in 2020, compared with a £108.3m profit a year earlier, but still hopes to open 100 sites this year. It closed 68p higher at 2,278p. Troubled lender Amigo tumbled by 1.8p to 11.9p per share after it told investors that the Financial Conduct Authority would extend its investigation into how Amigo assesses the creditworthiness of customers and its governance of the process.
The price of oil moved back into the red as traders were keen to trim their exposure to the energy market amid concerns the pausing of the vaccine distribution could impact on travel.
The price of Brent crude oil decreased by 0.8 per cent to 68.33 dollars per barrel.
The biggest risers on the FTSE 100 were British Land, up 23.4p to 532p, Rolls-Royce, up 4.85p to 122.85p, Land Securities, up 27.3p to 705.8p, AstraZeneca, up 254p to 7,232p, and Ocado, up 75p to 2,189p.
The biggest fallers on the FTSE 100 were Just Eat Takeaway.com, down 158p to 7,182p, Shell ‘B’, down 27.4p to 1,459p, Shell ‘A’, down 27p to 1,523.4p, CRH, down 56p to 3,379p, and BP, down 4.9p to 311.25p.