INSURERS will dominate the national corporate agenda this week but in the North East all eyes will be on the results from retail baking giant Greggs.
The publicity boost enjoyed by Newcastle-based Greggs as it fought its corner in the pasty tax row will not stop it reporting a sales decline tomorrow.
Chief executive Ken McMeikan spearheaded a fightback against Chancellor George Osborne’s plans to extend the 20% VAT tax to its pasties and sausage rolls when he marched on Downing Street to deliver a 300,000 strong petition from angry customers.
While the campaign galvanised support for Greggs’ hot savoury products, its recent poor run of trading is expected to have continued in its half-year results. The last update revealed a 1.8% drop in like-for-like sales in the 19 weeks to May and Greggs complained of six disappointing weeks amid the wet weather.
Those trends are set to have continued into June when fresh downpours piled more pain on the UK’s beleaguered high streets, where most of Greggs’ 1,600 stores are based.
Shore Capital analyst Clive Black said: “While such wet weather may have boosted the warm savoury participation of Greggs’ mix, we cannot help but be concerned about the impact upon trade of generally low levels of activity.”
He expects the group to report “another underwhelming” sales figure, with declines of between 1.5% and 2% since mid-May. Underlying profits will be flat at £16.9m, he predicts. However, the group’s top-line sales growth is set to continue as it presses ahead with its ambitious store opening plans. Mr Black expects Greggs to be on-track to open 90 stores in 2012 as it eyes 2,000 outlets.
It is trialling stores in new types of locations, such as bus stations and service stations, as it looks to reduce its exposure to the high street.
And it is also trying out new initiatives such as its Greggs Moment cafes, selling its products in Iceland supermarkets and opening specialist neighbourhood bakery stores with a greater selection of bread and cakes. Black believes the chain has entered an “exciting new phase” as it experiments with new ways to expand. Meanwhile Hovis maker Premier Foods will say its turnaround plans remain on track despite suffering a fall in profits tomorrow. The UK’s biggest food manufacturer has seen its shares lose three-quarters of their value in just over a year as it struggles under the weight of its near-£1bn debt mountain.