Shares of Greggs Plc (GRG.L) declined around 7 percent in the morning trade on London Stock Exchange after the British bakery retailer said its own shop like-for-like sales for the 17 weeks ended April 27 declined from last year, due to which fiscal 2013 profits would likely be slightly below the lower end of the current market estimate range.
The company also noted that overall profits have been affected in the first quarter of the year and are behind its plan and last year, despite good cost control.
In its trading statement, the company noted that its total sales for the 17 weeks, however, grew 3 percent, driven by new shop opening program and the continued development of wholesale and franchise sales. Wholesale and franchise sales contributed 2.9 percent to overall sales growth.
Meanwhile, like-for-like sales in own shops declined 4.4 percent, particularly impacted by adverse weather in January and March. The most recent two weeks indicate an underlying rate of like-for-like decline of around 1.5 percent.
The company noted that it is continuing to experience lower footfall across much of the estate although average transaction values have increased marginally. The new shop openings remain focused on locations that have been less impacted by lower footfall such as workplaces, travel and leisure destinations.
Sales of promotional deals have been particularly strong with a slight impact on margin with the consumer remaining under pressure, and this trend is expected to continue, the company said in its statement.
During the first 17 weeks, the company opened 18 new shops, including 6 franchised units with Moto Hospitality Limited, in line with its plan for the year.
Looking ahead, the company said its profits for the year ending December 28 would be slightly below the lower end of the range of current market expectations of 47.5 million pounds to 55.2 million pounds.
"We do not expect a significant improvement in the difficult underlying market conditions in the short term. The business is focused on continuing with our plans to invest in core sales performance whilst taking action to reduce costs.... We continue to make progress with our strategic plan which we are evolving to position the business for long term growth and to develop the Greggs brand," the company said.
In London, Greggs shares are currently trading at 429.70 pence, down 32.80 pence or 7.09 percent.
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