Greggs PLC: announces good start to the year

Newcastle upon Tyne / UK. (gs) British Greggs PLC announced Trading Update for the 18 weeks to 07 May 2016 and a good start to the year. The leading bakery food-on-the-go retailer in the United Kingdom counts more than 1’700 retail outlets throughout the country (1’720 shops as on 07 May). Overview:

• Total sales up 5.7% in first 18 weeks of 2016 (2015: 5.9%)
• Company-managed shop like-for-like sales in the first 18 weeks up 3.7% (2015 comparator period: 6.0%)
• 55 shop refits completed
• 43 new shops opened, 21 closures
• Breakfast, hot sandwiches and «Balanced Choice» options driving growth
• Consultation on supply chain investment proposals progressing

Shops

In the first 18 weeks we completed 55 shop refurbishments and in total will refit around 200 shops this year. These transformational investments continue to drive incremental sales growth as customers enjoy the improved shopping environment and additional facilities such as seating.

In the year to date we have opened 43 new shops, including 23 franchised units in transport locations. We closed 21 shops, giving a total of 1’720 shops trading at 07 May (comprising 1’592 company-managed shops and 128 franchised units). Our shop openings continue to focus on new food-on-the-go locations and the relocation of existing shops to support further growth. In March we opened our first company-managed shop in Northern Ireland, at Boucher Retail Park in Belfast. The shop is trading well and in the next few weeks we will open our first unit in central Belfast.

Consultation on supply chain investment proposals

At the time of our preliminary results in March we announced that we would be entering into consultation with trade union and employee representatives to consider proposals to close three bakeries as part of a proposed 100 million GBP investment programme in our manufacturing and distribution operations. The formal collective consultation on our proposals has now ended and we are progressing with our plans to close the three bakeries involved. The smallest site at Sleaford is now being closed and we expect to close our Twickenham bakery in the fourth quarter of 2016 followed by Edinburgh in the second quarter of 2017.

Our people impacted by these proposals have demonstrated their commitment and professionalism during a difficult period and our focus now is to work with them individually to ensure that we manage these changes in line with Greggs’ values as a responsible employer. Alongside these closures we will continue to develop our plans to invest in our remaining supply chain network over the next five years in order to create centres of excellence serving our growing shop estate.

Outlook

We have made a good start to the year. Input cost inflation remains low despite increased wage costs and, with a strong pipeline of product initiatives and plans to invest in our shops and supply chain, we expect to make progress in line with our previous expectations.