UK baker Greggs has asserted a weak outlook as tighter consumer spending and poor weather continues to hit sales.
Like-for-like sales – which exclude revenue from new stores – were down 2.6% in the 14 weeks to 6 October – a marginal improvement on the 3.5% decline in the spring.
Ken McMeikan, Greggs’ chief executive said the firm had been hit by higher flour and pork prices and that price rises are inevitable.
“You are going to see some price rises coming through. We will do everything we can to maintain our value,” warned McMeiken.
The firm partly blamed poor weather in July and flooding in September for the fall and said that it now expects to post negative like-for-like sales growth in the fourth-quarter.
“I think it will continue to be another very challenging year next year, particularly the first half,” added McMeikan.
However, Greggs’ overall revenue was up 5.9% thanks to an ambitious store expansion programme. The Newcastle-based baker has opened 70 new outlets, including 30 in motorway service stations – an attempt to diversify away from its traditional High Street stronghold.
"Whilst we remain cautious about the economic outlook total sales will continue to benefit from the success of our new shop openings and expansion in wholesaling and franchising," said Ken McMeikan, Greggs’ chief executive.
McMeikan added that the firm would aim to offset the impact of negative like-for-like sales growth and pressure on its profit margins "through tight control of costs and the increased profit contribution from wholesaling and franchising".
