The chief executive of Greggs has hailed the firm’s resilience after latest figures showed it swung to a loss during the coronavirus crisis but saw sales return to almost three-quarters of normal levels.
The food-on-the-go group posted a £62.2m loss for the first six months of the year, compared to profit of £36.7m this time last year, and sales were also down 45% to £300.6m. The firm closed all 2,025 of its shops during lockdown, but has now reopened all but seven sites in the Leicester area, helping sales to last week reach 72% of where they were during the same week last year.
Chief executive Roger Whiteside said: “Following successive years of unbroken growth Greggs made a great start to 2020, coming into the year with momentum and clear strategic plans.
“The strength of our business model enabled us to secure the liquidity needed to support our business through the current crisis and then to adapt our operation and strategic investment plans in response to the new environment.
“I want to thank the amazing team of people in our business who have risen to the challenges created by this crisis both in supporting the wider community and working together to redesign our operation to work safely under these new conditions.
“Greggs is now well prepared to deal with the challenges of social distancing and operate through the conditions we are faced with. Greggs remains a much-loved brand with long-term growth opportunities and the business is better placed to adapt to new conditions than ever before.”
Looking ahead, Greggs said it will continue to open or relocate more stores.
In the first half of 2020 it opened 20 new shops (including seven franchised units) and closed 45 shops, giving a total estate of 2,025 shops, of which 307 are franchise units. Over the year as a whole it now expects to open around 60 shops and close about 50.
In an interview on the BBC’s Today programme, Mr Whiteside said the company had managed to bring back 75% of its 25,000 staff, with the rest on furlough.
He said Greggs planned to continue using the furlough scheme until October when it comes to an end, and was optimistic that more workers could be brought back as the economy improved and demand grew.
The sausage roll champion’s CEO said the latest sales figures were especially encouraging as so many people are continuing to work from home.
Mr Whiteside said: “We’ve been really quite encouraged with how they’ve started to trade, given how many people are working from home and how footfall figures show that there are very few people about, so we’re trading now already at 72% of 2019’s levels, which is encouraging and ticking along in the right direction.
“The vast majority of Greggs customers simply can’t work from home, office workers form a portion of our customer base but the vast majority, over 80%, simply can’t work from home or aren’t working at all – they are students or retired. So, there is some exposure to office working but not as complete as some might think so we’re more resilient than many other brands because of the raw appeal of the types of products we sell to all types of customer and the locations. Yes some are near offices but the vast majority are nowhere near offices.
“The ones that have been most affected are near public transport, where we are 65% down. People simply aren’t using those shops. And those in city centres and office based working are down 45% but the majority of our shops are in open towns and suburbs or in locations which are accessed by car, and car travel has picked up as a result of public transport going down. We’ve got compensating areas doing better to compensate for those areas that are office-bound.”
When asked about keeping staff on as furlough coming to an end Mr Whiteside said he was optimistic Greggs would be bringing all 25,000 workers back.
He said: “We want the rest to remain on furlough and we want that demand to keep moving up so that we create more work for more people to come back to work. I remain hopeful that we’ve got until the end of October for that trend to continue.
“Who knows, the thing about this whole environment is its uncertainty. Who knows how things will get better or indeed get worse? What we have shown is that we’re prepared to and able to react and adapt to whatever the conditions are that are thrown at us but I want to be optimistic about the possibility that the economy can continue to get back to normal, whatever that is, in the course of the next few months until the end of October.”
Greggs shares remained steady following the announcement, trading at 1465p, 0.8% up, at the time of writing.
By Coreena Ford
Source: Business Live