Greggs swings to H1 loss after store closures

Bakery chain Greggs said on Tuesday that it swung to a loss in the first half as sales fell after its shops were forced to close for three months due to the coronavirus pandemic.

For the 26 weeks to 27 June, the company swung to a pre-tax loss of £65.2m from a £36.7m profit in the same period a year ago, with total sales down to £300.6m from £546.3m. Company-managed shop like-for-like sales declined 49% during the half.

Greggs said company-managed shops reached 72% of 2019 levels in the most recent week to 25 July. "Whilst these are early days, Greggs is already showing that the variety and geographical reach of our shop estate, combined with the broad appeal of the brand, which is not materially dependent on office-based workers, means we are less impacted by social distancing than many," it said.

Most of its shops are in towns and suburbs, or catchments that are generally accessed by car. Nevertheless, Greggs still expects sales to remain below normal for as long as social distancing is required.

Greggs said it would not be paying a final dividend for 2019 in order to preserve £33m of cash. It will also not pay an interim dividend for 2020.

Chief executive Roger Whiteside said: "Following successive years of unbroken growth Greggs made a great start to 2020, coming into the year with momentum and clear strategic plans. The strength of our business model enabled us to secure the liquidity needed to support our business through the current crisis and then to adapt our operation and strategic investment plans in response to the new environment.

"Greggs is now well prepared to deal with the challenges of social distancing and operate through the conditions we are faced with. Greggs remains a much-loved brand with long-term growth opportunities and the business is better placed to adapt to new conditions than ever before."