Greggs PLC Trading update and capital structure review (6126L)
April 29 2015 - 1:01AM
UK Regulatory
TIDMGRG
RNS Number : 6126L
Greggs PLC
29 April 2015
29 April 2015
GREGGS plc
TRADING UPDATE AND CAPITAL STRUCTURE REVIEW
Greggs is the leading bakery food-on-the-go retailer in the
UK,
with 1,650 retail outlets throughout the country
Continued strong trading in the year to date
GBP20 million special dividend
-- Own shop like-for-like sales in the first 16 weeks up 5.9% (2014: 3.8% growth)
-- 69 refits completed
-- 24 new shops opened, 18 closures
-- Product and service initiatives continue to drive growth
-- Supportive consumer income environment and low inflation
-- Special dividend of 20 pence per share declared
Trading performance
We have continued to see a strong trading performance in the
first four months of the year. Our total sales for the 16 weeks to
25 April 2015 grew by 5.0 per cent and like-for-like sales in our
own shops grew by 5.9 per cent over the same period, ahead of our
expectations.
Customers are clearly enjoying our improved range of
freshly-made sandwiches, including Balanced Choice products
offering healthier options with fewer than 400 calories. In the
coming weeks we will grow our Balanced Choice menu through the
introduction of upgraded salads, a summer berry fruit pot and our
new own-label drinks range, which has been developed with no added
sugar and includes `Juicy Water' options containing one of your
'five a day' .
Breakfast has continued to be an important driver of growth and
we have added new options to our range. Our GBP2 breakfast meal
deal now includes free range omelette sandwich combinations, as
well as new porridge flavours and a 'fruit and oatie' cookie. We
have also introduced a breakfast baguette which features in a GBP3
meal deal.
Shops
During the first 16 weeks we completed 69 shop refurbishments
and will refit 200 to 220 shops this year. These continue to
perform well as we transform the shop environment to strengthen our
'bakery food-on-the-go' positioning.
We also opened 24 new shops, including 17 franchised units in
transport locations. We closed 18 shops, giving a total of 1,656
shops trading at 25 April (comprising 1,594 of our own shops and 62
franchised units). On 30 April we will open a test site with the
Irish motorway service operator Applegreen, at a service area
located on the M2 near Belfast. Working with franchise partners
like Applegreen allows us to extend our offer to markets which were
previously inaccessible to us and will help us to assess Northern
Ireland's appetite for our `Always Fresh. Always Tasty.' offer.
Capital structure
The Board has completed its review of the appropriate capital
structure of the Group for the medium term. In doing so we have
considered the views of shareholders and our advisers. As a result
of this review and reflecting the views put forward the Board will
adopt the following approach:
-- We will continue to prioritise investment in the business and
maintain a net cash position. Given the leasehold nature of the
shop portfolio, the Board does not currently believe that it is
appropriate to take on structural debt.
-- We intend to maintain our progressive dividend policy, with a
target that the ordinary dividend is two times covered by
earnings.
-- We will aim to maintain a year end net cash position of
around GBP40 million to allow for seasonality in our working
capital cycle.
-- To the extent that we have material surplus capital within
the Group, taking into account the cash position, expected
performance and anticipated investment requirements, the Board
would expect to return capital to shareholders, likely by way of a
special dividend.
-- The Board may retain cash above the indicated level where it
believes that this would be in the interests of shareholders.
As a result of this review we will not carry out the proposed
share buyback announced at the time of the Group's preliminary
results. Rather, given the current strong cash position and
expected cash requirements for the year ahead, the Board declares a
special dividend of 20 pence per share, a distribution of GBP20
million. This dividend will be paid on 17 July 2015 to shareholders
on the register on 19 June 2015.
Outlook
The strong start to 2015 has been supported by rising consumer
disposable incomes and low input cost inflation. We expect market
conditions to remain favourable and support a good first half
performance, ahead of our previous expectations. In the second half
of the year we will come up against stronger sales comparables and
a less certain cost outlook. However we expect to deliver good
growth for the year as a whole and further progress against our
strategic plan.
ENQUIRIES:
Greggs plc Hudson Sandler
Roger Whiteside, Chief Executive Wendy Baker / Alex Brennan
Richard Hutton, Finance Director Tel: 020 7796 4133
Tel: 0191 281 7721
This information is provided by RNS
The company news service from the London Stock Exchange
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