Greggs sparks fears it could collapse as bakery giant reports £15m Covid loss
High street stores have faced unprecedented pressure over the past 12 months, with big names such as Debenhams and Sir Philip Green’s Arcadia group among 2020’s major retail casualties.
And even Greggs, the undisputed king of high street food shops, is feeling the strain.
The sausage roll champions – who were recently forced to axe more than 800 jobs as a result of the coronavirus crisis – said like-for-like sales fell by nearly a fifth over the last three months of 2020, running at 81% of the same period in 2019.
The company has warned shareholders that profits are unlikely to recover until at least 2022.
Greggs said total sales for the year slumped by nearly a third – 31% – to £811 million.
The company said it is braced for annual pre-tax losses of up to £15 million, compared to its whopping profit of £108.3 million the previous year, though it said the hit was contained thanks to Government support.
It said Covid-19 restrictions, which have seen England placed in a nationwide lockdown for the third time, will keep profits under pressure for another year at least.
A spokesperson for Greggs said: "The significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance.
"However, we do not expect that profits will return to pre-Covid levels until 2022 at the earliest."
It comes after Greggs cut 820 jobs at the end of 2020 as it faced sliding sales on battered high streets.
But shares lifted 8% as the expected losses are lower than feared and thanks to improving sales.
Sales were down as much as 29% year-on-year in its third quarter.
Greggs to cut staff hours as coronavirus crisis hits popular high street bakery
Greggs has tried to react to the new normal, launching a delivery partnership with Just Eat, which it said accounted for 5.5% of sales in the last three months of 2020.
It said 600 of its shops now provide delivery services to areas served by Just Eat and this is expected to increase to around 800 shops in 2021.
The group also confirmed it still hopes to open around 100 new stores, on a net basis, over the year ahead.
Chief executive Roger Whiteside said: "With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking.
"We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well.
But retail expert Clive Black, at Shore Capital, said the pandemic cast a cloud over Greggs' future on the high street due to the shift to remote working.
He said the move for many to working from home was a "game changer, which most probably notably reduces the long-term growth potential of the group”.
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