Shares in high street baker, Greggs, plummeted 7.5% in morning trading on Monday after the firm announced that like-for-like sales (so not counting new store openings) have dropped by 4.4% so far this year.
The firm blames three months of inclement weather and shoppers who are ‘under pressure’ for the fall, saying its profits for the full year are probably going to come in below City expectations.
In a statement, it said: ‘Despite good cost control overall profits have been affected in the first quarter of the year and are behind our plan.’ It added that even though ‘we are only four months into the year’, it is not expecting any bumper results to materialise in the remainder of the 12-month period. Market expectations were for profits of between £47.5m and £55.2m.
So where is Greggs at on a strategic level? Well, it already has around 1,700 shops across the UK, but has opened 10 already this year and refurbed another 59. These developments mean that total sales are actually up 3%, according to the firm’s interim management statement. It also confirmed plans to refit a total of 250 shops throughout 2013, aimed at enticing more people through the door for a hot pasty or two.
Furthermore, after last year’s partnership with the Moto chain of roadside service stations and cafes, there are now 16 Greggs shops operating under license, which the firm says have contributed significantly to the rise in total group sales.
So it’s fair to say that there are some encouraging developments happening at the firm, even if the freezing, rain-sodden first quarter has been tough. But with shareholders fleeing Greggs stock like nobody’s business, new chief exec Roger Whiteside (who recently replaced Ken McMeikan) will be hoping the new store openings get Greggs products selling like hot cakes.