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Business & Economy

Baker Greggs raises prospect of job cuts as COVID-19 knocks sales

High street baker Greggs has admitted it may be forced to axe jobs.

The Newcastle-headquartered retailer is consulting with staff on “changes to resource levels” amid the ongoing financial impact of the COVID-19 pandemic.

The company has blamed lower sales for the move, revealing it needs to cut staff costs ahead of the conclusion of the Government’s furlough wage support scheme.

However, officials at the pasty and sausage roll maker say they hope to “protect as many jobs as possible for the long-term” and mitigate the number of posts affected by reducing shop workers’ hours.

They also say the reignition of a store expansion programme – halted during the COVID-19 lockdown period – should help reduce redundancies.

The company – which is now in talks with union and employee bodies over its proposals – revealed its plans today (Tuesday, September 29) during a third quarter trading update.

According to its results, company-managed like-for-like shop sales improved to 76.1 per cent of their 2019 level in the four weeks to September 26.

Since re-opening its full retail estate on July 2, like-for-like sales in company-managed shops averaged 71.2 per cent of their 2019 level in the 12 weeks to September 26.

Officials say demand was helped by higher levels of customer clamour in its shops and the introduction of click-and-collect and delivery services – the latter of which is run alongside website Just Eat – across the UK.

Confirming talks are ongoing over its workforce plans, chief executive Roger Whiteside said the baker has had to withstand “a number of headwinds”, adding “trading remains uncertain” amid spikes in COVID-19 cases.

He said: “With the Job Retention Scheme planned to end in October, we are taking steps to ensure our employment costs reflect the estimated level of demand from November onwards.

“With business activity levels remaining below normal for the foreseeable future, we must change the way we work to be as productive and flexible as we can in order to protect as many jobs as possible for the long-term.

“We are proposing a series of changes (and) will update on the expected financial impact of these changes when the consultation ends in November.”

Highlighting its progress since the lifting of lockdown, Roger said the business had been buoyed by customer demand, revealing it will be bringing back more of its traditional treats, having dialled down its range in the weeks immediately after re-opening.

He also praised the impact of its digital operations.

He added: “Increased out-of-home activity in September appears to have driven a recovery in customer visits (and) in response we are bringing back more of our product range, including a broader sandwich range and classic favourites, such as Belgian buns.

“Our digital offer is developing quickly, benefiting from increased investment during the lockdown period.

“Our click and collect offer is now available in all shops (and) the rollout of our national delivery offer, in partnership with Just Eat, is progressing at speed and we are seeing encouraging participation levels.”

Greggs – which began life selling eggs and yeast to families on Tyneside’s streets – previously secured £150 million from the Bank of England’s COVID Corporate Financing Facility scheme to support operations following the impact of store closures during lockdown.