Greggs faces wheat price worries

BAKERY chain Greggs is likely to face questions this week over the impact of recent surging wheat prices, following droughts in Russia.

The group, which has about 1,400 stores across the UK, including 170 or so in Scotland, has kept sales in positive territory so far this year, helped by a TV advertising campaign stressing the firm's credentials as the "home of fresh baking".

Like-for-like sales for the 18 weeks to May were up 0.6 per cent, against tough sales comparisons a year earlier.

But the jump in wheat prices could be the main talking point at Tuesday's interim results, analysts said. Consensus forecasts are currently pencilling in pre-tax profits of 51.4 million for the full year to January - up from 48.8m a year earlier, but this could be squeezed if the group anticipates a significant rise in costs as a result.

First-half figures should at least be boosted by the chain's recent push into the breakfast market.

The group, which is headed by Scots-born chief executive Ken McMeikan, said in May it had sold more than two million bacon or sausage breakfasts to customers since the national launch in February.

The Newcastle-based business has emerged as one of the survivors of the retail bloodbath in the recession and is planning further store expansion to capitalise on growing popularity for its value for money proposition.

It is banking on opening a net 50 to 60 shops while 120 refits remain on track, generating further growth. Investors will also be looking for a dividend boost. Last year's 8 per cent profit rise allowed the company to raise its dividend by 11.4 per cent to 16.6p - the 25th straight year of growth since the company floated on the London Stock Exchange.