Baker Greggs axes jobs and issues COVID-19 profit caution – but remains ‘optimistic for growth’

A high street baker has warned profits are not likely to return to pre-COVID-19 levels until 2022 at the earliest as the pandemic – which has forced it to make hundreds of redundancies – continues to impact on trade.

Greggs says total sales for 2020 stood at £811 million, which was down on the £1.168 billion recorded in the previous 12-month period as it battled against coronavirus’ “enormous” effects.

Fourth-quarter company-managed shop like-for-like sales averaged 81.1 per cent of 2019 levels, with total sales of £293 million down on 2019’s £344 million.

Full-year pre-tax losses are expected to be up to £15 million.

And chief executive Roger Whiteside – who confirmed the Newcastle-headquartered baker has shed 820 jobs to manage COVID-19’s impact following a previously-announced consultation period – says the company remains at the mercy of “significant uncertainties in the near-term”.

However, the former Marks & Spencer food halls boss says the firm is nevertheless “optimistic about our prospects for growth once social restrictions are lifted”, revealing it hopes to open around 100 net new stores in the year ahead.

He also praised the impact of its ongoing home delivery partnership with website Just Eat, confirming hundreds more shops are expected to take part in the scheme during 2021.

And he revealed the company’s long-standing relationship with Iceland, which sees some of Greggs’ products sold from the grocery operator’s freezers, has enjoyed success during the pandemic.

Confirming the company expects profits to continue being impacted by COVID-19 during 2021, Roger said: “In a year like no other, I am enormously proud of the way in which our team has risen to the challenges we have faced.

“While the impact of COVID-19 has been enormous, we have established working practices that allow us to provide takeaway food services under the different levels of restrictions we have experienced.

“Looking ahead, 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.

“(But) we have taken action to position Greggs to withstand further short-term shocks and are optimistic about our prospects for growth once social restrictions are lifted.”

Referring to Greggs’ Just East partnership, Roger added: “Our digital offer continues to develop, and the rollout of our national delivery offer is supporting the recovery in sales levels.

“In the fourth quarter of the year, delivery represented 5.5 per cent of company-managed shop sales; 600 of our shops now provide delivery services to catchments served by Just Eat and we expect this to increase to around 800 shops in 2021.”