Hard winter takes a sizeable bite out of Greggs shares

 

Baker Greggs’ share price crumbled today after it said bad weather and fewer people out shopping meant its first 17 weeks profits would be lower than expected.

The shares fell 33.8p, or 7.3%, to 428.7p — their lowest level for more than two years.

New chief executive Roger Whiteside, who only took over in early February, said: “We brought forward the timing of our trading statement because underlying sales are down 4.4%. We were hit by snow in both January and March and footfall in all kinds of shopping areas, including high streets and retail parks, is down. The better news is that, in the last two weeks, like-for-like sales are only down 1.5%.”

Whiteside said that customers were making less frequent visits to his shops and those who were were taking particular advantage of special offers. He said: “Customers are shopping for takeaway food across more brands looking for the special deals. It appears to be the same across the country. We have seen strong demand for our breakfast and lunch meal deals — things like a hot drink and bacon bap for £2.”

The group has opened 18 new shops so far this year, including six in Moto motorway service stations, and Whiteside said around three-quarters of this year’s openings would be in locations away from its traditional retail areas.

Greggs said: “Although we are only four months into the year, based on current own shop like-for-like performance, we believe that profits for the year are likely to be slightly below the lower end of the range of market expectations.”

Most analysts cut their current forecasts for the year by around 10%. Sahill Shan of N1 Singer reduced his forecast for pre-tax profits from £51.2 million to £44.5 million, which is well down on last year’s £51.9 million.

Philip Dorgan of Panmure Gordon said: “We think that lower footfall on the high street is structural and that Greggs needs to re-focus its business faster than it currently plans. This would lead to lower growth, but potentially decent cash generation and higher return on capital.”

Greggs said its “bake at home” range selling through Iceland remained successful and it would further develop its wholesale strategy.

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