Greggs has appetite for growth as it plans new stores and 800 jobs

By SCOTT REID and PETER CRIPPS
Published on 14/03/2012 09:33

BAKERY chain Greggs had vowed to push ahead with scores of store openings this year creating up to 800 jobs despite a slowdown in recent sales.

The group yesterday said it had opened a record 98 branches in 2011, bringing the total to 1,571 at the end of the year. It is poised to open 90 more stores than it shuts in 2012, creating between 700 and 800 posts – figures flagged in a trading update earlier this year.

Annual results showed that like-for-like sales rose 1.4 per cent in 2011, which was better than the group had been expecting, though sales are down by 1.8 per cent so far in the current year, reflecting weaker footfall.

Greggs, led by Scots-born chief executive Ken McMeikan, recorded a 1.1 per cent rise in underlying profits to £53.1 million, as its meal deals and breakfast baps proved popular with consumers and it sold a record 17.3 million cups of coffee. Most of its 20,000 staff are set to share £5.9m of the profits through a rewards scheme.

The firm has increasingly been opening outlets away from the high street, in locations such as railway stations, retail parks and shopping centres to reflect changing shopper trends.

It is to open two more Greggs Moment coffee bars this year after a successful trial in its home city of Newcastle.

McMeikan stressed the group still had a strong future in traditional high street locations, but added that it was increasingly following customers to where they work and travel.

“We are still finding if we get the right location on the high street, those shops are performing well wherever they are in the country,” he said.

In some cases, the firm has benefited from the closure of stores by allowing it to get cheap deals on prime high street locations.

It has opened sites at Bristol and Swansea bus stations and is trialling an outlet at a motorway service area off the M6 near Lymm, Cheshire, which has the potential to lead to 30 more.

McMeikan said the dip in sales in 2012 reflected a 4 per cent drop in shopper numbers on the high street so far this year, but it was too early to say if this was the start of a prolonged trend.

The group has introduced a range of special deals in some of the weaker performing parts of the UK, mainly in Scotland, the north-east of England and the Midlands. These include two sausage rolls for £1 and a new range of £1 baguettes with fillings such as cheese and pickle.

McMeikan said there was some good news for consumers with cost pressures easing as inflation falls but he could not guarantee there will not be price rises at the chain this year.

The company’s bottom-line profits rose 15 per cent to £60.5m as it received a £7m one-off boost from its pension fund.

Greggs is paying a total dividend of 19.3p, up 6 per cent – the 27th consecutive year of dividend growth.