Hot Features
Premium
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
Total sales grew by 3.4 per cent in the first half driven by Greggs’ new shop opening programme and growth in wholesale volumes.
In a statement the company said that trading during “the early part of the year was particularly challenging. Like-for-like sales performance in our estate improved in the second quarter but across the first half as a whole declined by 2.9 per cent. As a result total Group sales in the 26 weeks ended 29 June 2013 (2012: 26 weeks ended 30 June) increased to £362 million (2012: £350 million)”.
Although cost control in the period was strong our vertically integrated business model makes profit performance particularly sensitive to movements in like-for-like sales. The impact of lower like-for like sales in the first half led to a £4.7 million decline in operating profit to £11.5 million (2012: £16.2 million), a net operating margin of 3.2 per cent (2012: 4.6 per cent).
Despite the additional contribution from new shop openings and wholesale sales growth the bakers were not able to offset the significant impact of like-for-like sales decline in the core business. In addition the first half result includes one-off costs of £1.0m reflecting an updated assessment of the impairment of assets in under-performing shops and costs associated with the review of strategy referred to below.
The improving trend in like-for-like sales highlighted at the time of our Interim Management Statement” continued to the end of the period and the company say they “remain focused on specific initiatives to drive further improvement”.
After net finance costs of £136,000 (2012: £188,000), pre-tax profit was £11.4 million (2012: £16.0 million). The results incorporate the change in accounting for defined benefit pension schemes mandated by the revision to IAS19 (Employee Benefits). This has resulted in an additional £0.5m charge in the restated 2012 pre-tax profits.
Diluted earnings per share were 8.5 pence (2012: 11.9 pence). As a result of good cash control Greggs “ended the period with a cash balance of £12.0 million (2012: £1.8 million)”.
The Board has declared an interim dividend of 6.0 pence per share (2012: 6.0 pence). The interim dividend will be paid on 4 October 2013 to those shareholders on the register at the close of business on 6 September 2013.
