Greggs has predicted a “satisfactory” financial year in 2014 after total sales rose 4% for the 17 weeks ending 26 April.
Like-for-like sales increased by 3.7%, in comparison to a 4.4% decline in the first quarter of 2013, which it had blamed on snow and the cold weather.
Greggs also reported “realised property profits” of £1.4m (2013: £0.2m) as it sped up the closures of under-performing stores; it closed 28 over the period taking its total estate to 1,663 shops.
Greggs said it had been boosted by refits at 66 of its stores as part of its ongoing plan to convert into a bakery food-on-the-go business. The store refit programme will see it invest £25m over the next five years and it is aiming to refurbish 200 stores by the end of 2014, adding new seating and a “more contemporary” look and feel. It is on course to close 79 in-store bakeries in 2014 as part of this transition.
The chain has also seen a rise in franchised stores, with 11 of the 20 new shops it opened over the period within transport locations such as service stations.
“In line with our strategy, sales growth is also being driven by improved availability of our freshly made sandwiches, longer trading hours and product upgrades such as our improved coffee blend, which is benefiting from inclusion within our popular promotional meal deals,” said chief executive Roger Whiteside, who predicted the second half of the year to be “more challenging” due to cost inflation and “stronger sales comparables”.
“Cost control has been strong in the year to date and input cost inflation has been lower than we have experienced in recent years. As a result there has been some benefit to margin in the period. The business remains highly cash-generative and maintains a strong balance sheet position,” he added.
Whiteside had previously labelled 2013 a “transitional year” as pre-tax profits dipped 18.9% to £41.3m for the 52 weeks ending 28 December 2013. In January, Greggs announced 410 redundancies as part of a restructure of management and support teams that it claimed would save £6m a year from mid-2015.
