Wet weather dampens sales at Greggs
High street bakery chain Greggs blamed the Â“exceptionallyÂ” wet weather in April and early May for disappointing trading figures in its interim mangement statement issued today.
Total sales for the 19 weeks to 12 May increased by 4.3%, driven by a successful new store opening programme, but like-for-like sales slipped by 1.8%.
Greggs opened 25 new shops in the period, taking the total number of outlets to 1,591, and completed 42 shop refurbishments in line with its plan to refit a total of 100-120 shops during 2012. In addition, the company is continuing to roll-out its new "Greggs moment" coffee shops, with plans to open three new outlets by September 2012.
Chairman Derek Netherton said: "The trading environment for all retailers has remained extremely challenging, and high street footfall has remained relatively weak."
Greggs criticised George Osborne’s so-called ‘Pasty Tax’ in which the government is proposing to extend the standard rate of VAT to freshly baked food such as pasties, pies, and sausage rolls.
As savoury sales account for more than a third of turnover Greggs said the outcome of the tax could have a serious impact on its sales and profit. However, the company offered an alternative solution in which VAT would charged on all food kept hot for sale in a heated environment after cooking, all food re-heated to order and all food supplied in heat-retaining packaging. The company said this would clearly differentiate between fresh bakery food and food that is being sold intentionally hot.
Regarding the outlook, Netherton said: "We believe consumers' disposable incomes will remain under pressure from high fuel, energy and food costs, although consumer sentiment could benefit in the months ahead from major national events including the Diamond Jubilee celebrations, the Olympics and the Euro 2012 football championship.
"We will continue to support consumers in these difficult times by driving great value through our meal deals and promotional activity, whilst making Greggs accessible to more new customers through our new shop openings and new channels to market."
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