Newcastle upon Tyne / UK. (gplc) Greggs PLC reported record profits on the same day as managing director Sir Mike Darrington announced he is to step down after 20 years in charge. Sir Mike (66) said the bakery chain was on the lookout for a successor. He has helped create one of the region´s biggest business success stories since becoming managing director in 1984. With a departure date yet to be set, Sir Mike will stay on for the time being as the company looks to build on its impressive recovery over the past year.
It said its pre-tax profits last year had increased 27,1 percent to 51,1 million GBP, which included a one-off profit of 2,2 million GBP from the sale of bakeries in Newcastle, Glasgow and Manchester. The figures represent a change in fortune for Greggs, which suffered a 19,8 percent drop in pre-tax profits in 2006 as a result of high energy costs and company restructuring.
This led to the closure of 14 of its poorest performing Baker´s Oven shops in Scotland and the North East as well as the rebranding of 49 other outlets to Greggs. The firm is looking to increase its profits again this year with the help of an additional 2.5 million GBP set aside for its marketing campaign featuring Phoenix Nights star Paddy McGuinness and has already seen like for like sales rise 6,2 percent in the ten weeks to March 08.
Greggs PLC warns that prices could be going up further this year as a result of dearer ingredients such as flour and vegetable oil. Sir Mike: «Like every other business in our sector, we are continuing to face substantial pressure from rises in the cost of energy and in our key ingredients. We will work hard to mitigate the impact of cost increases through larger efficiency and, in recovering higher costs in the market place, shall take account of consumer confidence and the competitive environment».
The group has more than 1.350 shops in the United Kingdom, 141 of them in the North East, where it employs 2.300 of its 19.000 workers. It plans to open 70 shops and close 30 this year and is also looking to build on its eleven shops in Belgium (read more).
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