Greggs cashes in as shoppers seek value

Bakery chain Greggs shrugged off the effects of bad weather and dwindling consumer spending power to announce growth in sales and profits yesterday.

Chief executive Ken McMeikan said Greggs' focus on value meant it should benefit from consumers' more cost- conscious outlook this year.

The firm opened 68 shops last year and will open another 80 in 2011, adding to its existing 1,480 outlets, taking advantage of lower commercial rents.

He said commodity prices were continuing to push up the price of food, but said Greggs' efficiency savings meant it had put up prices by less than its rivals, and the company would continue to protect its reputation as a value retailer by finding more cost-savings without compromising on the quality of its food.

Pre-tax profit in the year to 1 January increased by 7.7 per cent on 2009 to 52.5 million as the Newcastle-based firm boosted margins, despite inflationary pressures. Sales were 662m, up 2.1 per cent against 2009, on the back of record expansion.

The company returned 12.9m to shareholders through a share buy-back programme last year, and yesterday recommended an increased final dividend of 12.7p per share. That would take the total for the year to 18.2p, up 9.6 per cent on the year before.

Taken together, the cash return to shareholders through buy-backs and dividends paid in 2010 was 29.9m.

Greggs said 16,800 qualifying employees will share a record 5.8m through its profit sharing scheme, "in recognition of the efforts they have all made to deliver record results under very challenging trading conditions".