July 1, 2014 12:52 pm

Greggs reaps benefits of turnround plan as shares near high point

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©Mark Pinder

Greggs the bakers has shrugged off its miserable 2013, posting a 3.2 per cent jump in like-for-like sales for the first half of the year. This contrasted with a sharp 2.9 per cent drop in sales for the same period last year.

The Newcastle-based company benefited from sprucing up its stores under a so-far successful turnround plan that has helped push its shares back near their all-time high.

Greggs launched the turnround plan last summer, focused on opening fewer stores and trying to attract more of the “food-on-the-go” market from operators such as Pret A Manger and the supermarkets, which have tried to improve their lunchtime offering.

The company has since rejigged its estate, closing 36 shops and opening 26 others in the period. It has also refurbished 131 of its outlets as it focuses on moving beyond pastries, introducing better coffee and more breakfast options.

Management at the group estimated that the refits accounted for about a third of the improvement in like-for-like sales, with longer opening hours and wider product ranges also helping the group.

Analysts at UBS expect Greggs to benefit from reduced cost inflation, which should improve its bottom line. Broker N+1 Singer upped its pre-tax profit forecast for the year by 4 per cent to £46.9m.

Greggs itself expects operating profits of between £16m and 17m at its interim results later this month.

Shares in Greggs rallied 3.3 per cent to 553.33 – just off the baker’s 2012 all-time high of 555p.

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