Greggs hit by lack of lunchtime trade but Just Eat tie-up offers crumb of comfort
Greggs, the bakery and snacks chain, will this week lay bare the impact that a lack of lunchtime trade during the pandemic has had on its bottom line.
The group, whose 2,000-plus outlets are a familiar sight on Britain’s high streets, has already warned that profits will not recover until at least 2022. Its full-year results, due this week, will spell out the scale of the impact last year as offices closed and shopper numbers shrunk as much of the retail sector faced restrictions or lockdowns.
In January, Greggs, which cut more than 800 jobs as the pandemic ate into its usually busy lunchtime trade, said like-for-like sales fell by nearly a fifth over its fourth quarter to January 2.
The firm is braced for annual pre-tax losses of up to £15 million, against profits of £108.3m the previous year, though it said the hit was contained thanks to government support. Coronavirus restrictions will keep profits under pressure for another year at least.
The chain has sought to shore up trade by launching a delivery service with Just Eat. It noted in January that 600 of its shops now provide delivery services to catchments served by Just Eat and this is expected to increase to around 800 shops this year.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, noted: “Greggs doesn’t expect a return to pre-Covid levels of operations until 2022 at the earliest.
“The company has tried to adapt its operations to keep up with the nation’s changing snacking habits by rolling out click and collect and a delivery service.
“It heated up its expansion programme by opening new stores in locations like retail parks which can be easily accessed by car, which have not suffered with declines in footfall as much as other areas.
“Vaccine roll outs seem to have given investors confidence that it will bring home the bacon once more as the recovery continues, but the share price is still 11 per cent below its level at the start of the pandemic.
“Flaky sales are likely to continue into the second half of 2021, but at the last reading Greggs had a buoyant net cash position of £37m and a three-year £100 million revolving credit facility.”