Greggs goes against the grain to win sales

Jan 10 2008 by Chris Knox, The Journal

BAKER Greggs said it was coping with record wheat prices and a retail slump to post 5.6% Christmas sales growth.

The Newcastle company, with 1,350 stores the UK’s biggest high street baker, said it had significant pressures after wheat prices doubled in a year and coffee and milk costs rose by up to 20%.

The group raised some prices by 4.5% last year. But like-for-like sales rose 5.8% in the 28 weeks to December 29, a full-year increase of 5.3%.

The news is a turnaround for Greggs, which reported its first sales dip for 10 years in 2006, so axed 200 jobs and restructured the Baker’s Oven chain.

MD Sir Michael Darrington credited centralisation for the success. He said: “I don’t think it’s going to be an easy year by any means, but I don’t think we are going to experience the pinch as much as those selling high-market foods.”

Analyst Citi expects 2007 pre-tax profits of £46m, up from £43.7m. It sees potential for 1,700 Greggs UK stores.