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Greggs blames weather for fall in sales Greggs blames weather for fall in sales
(35 minutes later)
High street bakery chain Greggs has issued a surprise profit warning, blaming the cold weather for an unexpected fall in sales which will see profits failing to hit expectations. The high street bakery chain Greggs has issued a surprise profit warning, blaming the cold weather for an unexpected fall in sales which will see profits failing to hit expectations.
The unscheduled announcement sent shares in the sandwich and sausage roll chain tumbling 7.5%, or 34.6p, to 427.9p in early trading. The company did not reveal how far profits would fall, only saying they would be "slightly below the lower end of the range of market expectations" of £47.5m.The unscheduled announcement sent shares in the sandwich and sausage roll chain tumbling 7.5%, or 34.6p, to 427.9p in early trading. The company did not reveal how far profits would fall, only saying they would be "slightly below the lower end of the range of market expectations" of £47.5m.
It means profits are set to fall for the second year in a row as the company struggles with fewer shoppers and a squeeze from competitors.It means profits are set to fall for the second year in a row as the company struggles with fewer shoppers and a squeeze from competitors.
Greggs is the latest company to blame the weather for poor sales, following a similar profit warning from department store Debenhams last month, which blamed heavy snow in January for its own misfortune. Greggs is the latest company to blame the weather for poor sales, following a similar profit warning from the department store Debenhams last month, which blamed heavy snow in January for its own misfortune.
Greggs chief executive Roger Whiteside said like-for-like sales in the 17 weeks to end of April fell 4.4% due to the snow in January and some of the coldest March weather in 50 years, although sales had improved in the past two weeks declining 1.5%. The Greggs chief executive, Roger Whiteside, said like-for-like sales in the 17 weeks to end of April had fallen 4.4% because of the snow in January and some of the coldest March weather in 50 years, although sales had improved in the past two weeks, declining 1.5%.
He added: "We are continuing to experience lower footfall across much of the estate although average transaction values have increased marginally. He added: "We are continuing to experience lower footfall across much of the estate, although average transaction values have increased marginally.
"Our new shop openings remain focused on locations that have been less impacted by lower footfall such as workplaces, travel and leisure destinations."Our new shop openings remain focused on locations that have been less impacted by lower footfall such as workplaces, travel and leisure destinations.
"We are not putting this all down to the weather. The trend of the last few weeks shows that there are fewer customers shopping, so we are trying to make stores more attractive and provide more space for customers in our stores so they can stay inside and out of the bad weather.""We are not putting this all down to the weather. The trend of the last few weeks shows that there are fewer customers shopping, so we are trying to make stores more attractive and provide more space for customers in our stores so they can stay inside and out of the bad weather."
He explained that the company's stores in traditional high street locations are suffering as the casual sausage roll buyer saves their money by eating at home, while new sites opened in railway stations and commuter hubs – or "non-conventional" locations as the company calls them – are trading well. He said the company's stores in traditional high street locations were suffering as the casual sausage roll buyer saved money by eating at home, while new sites in railway stations and commuter hubs – or "non-conventional" locations as the company calls them – were trading well.
Sales in the past 17 weeks were up 3%, due to 18 new store openings, a successful partnership with Moto service stations and an extension of Greggs-branded frozen food sold in Iceland supermarkets. Sales in the past 17 weeks were up 3%, owing to 18 new store openings, a successful partnership with Moto service stations and an extension of Greggs-branded frozen food sold in Iceland supermarkets.
Whiteside said: "We do not think the supermarket sales are cannibalising our own store sales. We've looked at this very closely but cannot find any evidence of this. They are two separate markets."Whiteside said: "We do not think the supermarket sales are cannibalising our own store sales. We've looked at this very closely but cannot find any evidence of this. They are two separate markets."
Patrick Coffey, analyst at Liberum Capital, revised down his profit forecast by 7.5% to £46.1m, adding he expects consensus to be cut by 10%. Patrick Coffey, analyst at Liberum Capital, revised down his profit forecast by 7.5% to £46.1m, saying he expected consensus to be cut by 10%.
He said: "There is a high level of uncertainly surrounding the aggressive discounting from competitors, declining footfall on the UK high street as well as the decline in current trading already seen this year."He said: "There is a high level of uncertainly surrounding the aggressive discounting from competitors, declining footfall on the UK high street as well as the decline in current trading already seen this year."