Greggs warns on job losses amid 'uncertain' outlook

High Street baker Greggs warned of job cuts and reduced hours for staff in the face of expected lower demand despite better trading in September after a slow August.

The company on Tuesday said like-for-like sales in company-managed shops averaged 76.1% of 2019 levels in the four weeks to September 26 - in line with planning assumptions. Sales were 71.2% of the 2019 level in the 12 weeks to the same date.

Greggs, famous for its sausage rolls, said it would look to minimise the risk of job losses by negotiating reduced hours, adding that a consultation with unions had started.

It warned that the outlook for trading remained uncertain, with rising Covid-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home.

The government last week told people to work from home where possible, with restaurants and bars closing early to as Covid-19 infections spiked. The new restrictions could last six months and harden if the new outbreak is not stymied - a blow to any recovery the baker was hoping for.

“With business activity levels remaining below normal for the foreseeable future we must change the way we work to be as productive and flexible as we can in order to protect as many jobs as possible for the long term,” Greggs said in a statement.

Analysts at Shore Capital reiterated their 'sell' recommendation, albeit "with a heavy heart" for a business "for which we have much admiration".

However, they warned Greggs shares could fall by up to a further 35% given the company had already lost a a quarter of its sales base "which could dip again in October with new restrictions" making the current environment feel "like a slog to us".