Rivals nibble Greggs profits as rolls and pasties suffer
Greggs, the largest bakery chain in the UK, said that tough trading and greater competition on the High Street had hit its profits in 2006.
The rapid growth of convenience stores and the wealth of choice offered by the takeaway food stores had taken a toll and, despite having a national network of more than 1,330 bakeries, Greggs had suffered.
Energy bills had risen to £4.5m, putting a dent in the revenue streams, and pre-tax profits fell by 12.8% to £43.7m, while like-for-like sales grew by only a “disappointing” 0.5%.
“These are not good numbers and the directors know it,” said City analyst Colin Perry. “The firm has put in place a major programme of store refurbishments and sold of some of its poorly performing Bakers Oven shops in the north of England and Scotland.
“The products are pretty well regarded, however, and if we have a cooler summer this year then sales of their sausage rolls and pasties may recover.”
Greggs managing director Sir Michael Dorrington said: “Trading conditions were the most demanding that we have encountered for well over a decade, with increased competition and a warm summer meaning our core clientele of office workers avoided hot food at lunchtime.”