Greggs PLC: resilient performance in tough market

Newcastle upon Tyne / UK. (sj) Greggs PLC continues to make good progress and has delivered sales growth in the current financial year to date, despite an increasingly challenging trading environment. Total sales for the 39 weeks ended 02 October 2010 increased by 2,6 percent, including like-for-like growth of 0,5 percent. In the third quarter (13 weeks to 02 October 2010) total sales grew by 2,1 percent, including a like-for-like sales increase of 0,2 percent.

Breakfast sales have been particularly strong, with the bacon roll now our best-selling sandwich line. The company is now extending its breakfast range with the roll-out of croissants, pain au chocolat and porridge.

Greggs´ retail expansion programme remains firmly on track, with a net 32 new shops opened in the year to date, giving the company a total of 1’451 shops at 02 October 2010. The company now expects a total net new shops for the year as a whole to be at the upper end of our previously indicated range of 50 to 60 units.

In addition, Greggs has also completed 84 shop refurbishments, including 17 of the concept shops the company trialled in 2009. Greggs is well on course to meet its target of 120 refurbishments this year including 30 concept shops.

Construction of the replacement bakery in Newcastle upon Tyne is progressing well, and is scheduled to begin production in mid-2011. Greggs has received planning permission for the new cake and confectionery bakery in Penrith and commence building later this month ready to open in summer 2011. The company has also submitted a planning application for a new bakery in Wiltshire to enable Greggs to unlock the significant growth opportunities the company has identified in the South and South West.

Greggs continues to self-finance its capital expenditure requirements. There has been no material change in the net cash position since the end of the first half, when the company had 24,6 million GBP on the balance sheet. In the second half to date the company has purchased for cancellation a further 290’865 shares at an average price of 4,40 GBP and a total cost of 1,3 million GBP, making a total outlay on share buybacks in the current year to date of 5,8 million GBP. This is in line with the plans the company announced in March to return up to 15 million GBP of surplus cash to its shareholders.

Despite the tough economic climate, Greggs´ customers and staff have shown tremendous generosity, helping the company to raise over 430’000 GBP so far this year for the Pakistan Floods Appeal, Haiti Earthquake Appeal, Greggs Breakfast Clubs and the Greggs Foundation.

Chief Executive Ken McMeikan: «As we expected, the trading environment has been tough and is likely to remain so, with consumer spending continuing to be constrained and inflationary pressures building for next year. We anticipate that like-for-like sales in the final quarter will be broadly flat and therefore marginally positive over the year as a whole. We continue to keep a very tight focus on costs and our financial position remains strong. Overall business performance in the year continues to be in line with our expectations and we believe that Greggs remains on track to deliver another year of progress in 2010».