4th Mar 2015 07:58
LONDON (Alliance News) - Bakery chain Greggs PLC Wednesday reported a higher profit for its last financial year, buoyed by revenue growth following its successful push into the food-to-go market and better market conditions, alongside strong returns on its shop refurbishments and cost control.
Greggs is in the middle of a revamp, as it moves to build a bigger food-on-the go business to capitalise on growing demand in that market, and move away from its traditional pasties and sausage rolls. The company is also investing in its store portfolio, closing unprofitable shops and opening new ones, as well as refurbishing its existing estate.
The company's turnaround plans seem to be paying off, as its pretax profit for the financial year to January 3 increased to GBP49.7 million, up from 2013's profit of GBP33.2 million, driven by a 5.5% rise in revenue to GBP804.0 million from GBP762.4 million. Like-for-like sales in its own shops, which exclude franchises and are sales from shops open more than a year, were up 4.5% during the year, following a 0.8% decline the year before.
"The result reflects good like-for-like sales growth, particularly in the second half of the year, strong returns on our investments in shop refurbishment and excellent cost control in our operations and as a result of structural changes," the company said in a statement.
Signalling its confidence, Greggs increased its total dividend for 2014 by 13% to 22.0 pence.
The company booked GBP8.2 million in one-off restructuring costs during 2014 relating to its in-store bakeries and support operations.
Greggs said it invested a total of GBP48.9 million of capital expenditure in the business during 2014, which included 213 shop refurbishments and the opening of 30 new shops.
"The investment returns on our refurbishment expenditure were good, meeting our return target after one year and with the expectation that we will see further improvement in the year ahead. The performance of new shops improved significantly in the year, partly due to progress in the performance of prior year openings and partly due to a better than normal start from our 2014 acquisitions. In the year ahead we aim to increase the rate of openings but will continue to be selective and keep the focus on achieving strong investment returns," the company said.
Greggs said that following the success of its 2014 capital investment programme, it it planning capital expenditure of around GBP65.0 million in 2015.
"As in 2014, we will prioritise investment in our core estate and on the upgrading of our process and systems platform," said Greggs.
The group said it plans to refurbish 200 to 220 shops in 2015 and expects to invest in between 60 and 70 new shops.
"We have improved both our food offer and the shop experience for customers. Market conditions have been more favourable and like-for-like sales have grown throughout the year. This has resulted in record underlying profits for the financial year. Overall we are confident of delivering a further year of good growth and progress against our strategic plan in 2015," said Chief Executive Roger Whiteside in the statement.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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