Greggs warns on profits, cuts 820 jobs

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Greggs PLC (LON:GRG) warned that its profits will not return to pre-coronavirus pandemic levels until 2022 at the earliest and has cut 820 jobs to save costs after completing a previously announced consultation.

The bakery chain said it expects its loss before tax for the year ended January 2, 2021, to be up to GBP15mln, after posting a GBP108mln profit a year earlier.

READ: Markets hold up well despite new lockdown restrictions but losers will continue losing

The group said it ended the year with a net cash position of GBP37mln, with GBP100mln available under a revolving credit facility.

Over the fourth quarter, Greggs’ total sales tumbled by 15% to GBP293mln, and company-managed shop like-for-like sales averaged 81.1% of the 2019 level.

The firm said the quarter saw variable trading conditions as different lockdown restrictions were enforced across the UK, though sites accessed by car performed particularly well.

The FTSE 250 company said it continues to develop its digital offer, delivering food in partnership with JustEat, which is supporting the recovery in sales levels.

However, in the fourth quarter delivery represented only 5.5% of company-managed shop sales with 600 shops involved, though they should increase to 800 this year, the group added.

During the year Greggs opened 84 new shops, including 35 franchised units, and closed 56, growing the estate to 2,078 shops as at January 2, 328 of which are franchised.

“The easing of restrictions and increase in footfall in town centres during the late summer and early autumn, helped shops bring home the bacon once more, but fresh lockdowns saw sales crumble again,” said Susannah Streeter, analyst at Hargreaves Lansdown.

“Flaky sales are likely to continue well into 2021, given the latest lockdowns but Greggs has a net cash position of GBP37mln and a three-year GBP100mln revolving credit facility which should help it stay resilient through the months ahead.”

Shares jumped 7% to 1,909.11p on Wednesday at the opening bell.

–Adds analyst comment, shares–

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