Bakery chain Greggs said it is going to report a full-year loss and cautioned that as the pandemic affects sales, profits will not rebound until at least 2022.
The Newcastle-based company, which recently cut more than 800 jobs in the aftermath of the coronavirus outbreak, said like-for-like revenues fell by almost a fifth in the fourth quarter to Jan. 2, to 81 percent of the amount of the previous year.
Greggs said overall revenue for the year slumped to 811 million pounds by almost a third – 31 percent.
The company announced that it expects an annual pre-tax loss of up to £ 15 million compared to a profit of £ 108.3 million in the previous year, although it stated that the loss was reduced thanks to government funding.
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The company said that for at least another year, Covid 19 sanctions, which put England in a national freeze for the third time, would keep profits under pressure.
This is the first annual loss since Greggs went public in 1984, The Guardian reported.
“Significant uncertainty about the duration of social constraints, along with the impact of higher unemployment, makes it difficult to predict performance,” Greggs said.
“However, we do not expect profits to return to pre-crisis levels until 2022 at the earliest.”
This comes after at the end of 2020, Greggs cut 820 jobs as the business battled dropping profits in declining high streets.
Shares rose 8 percent, however, as projected losses were smaller than anticipated and thanks to sales improvement.
Sales in the third quarter fell as much as 29 percent year on year.
Through entering into a supply agreement with Just Eat, which it said accounted for 5.5% of fourth-quarter revenue, Greggs has attempted to shore up trade.
Greggs said that 600 of its stores already provide Only Eat’s catchment areas with a delivery service, and that number is projected to increase to about 800 stores by 2021.
The group has also reported that it still plans to open next year about 100 net new stores.
“As customers spend more time at home, we have successfully expanded our partnership with Just Eat to provide a delivery service, and we have also seen strong sales through our long-standing partnership with Iceland, which offers our home baking products,” said Chief Executive Roger Whiteside.
We have re-opened new stores where we see good opportunities, with especially good performance in locations accessible by car.
Clive Black, retail analyst at Shore Capital, said, however, that because of the move to teleworking, the pandemic puts the future of Greggs on the high street in doubt.
He said the transition to home-based work for many is a “game changer” that will most likely reduce the long-term growth potential of the company significantly.