Greggs shares plunge 19pc after “challenging” March

greggs
GLOUCESTER, UK - DECEMBER 04: unidentified woman leaving Greggs bakery shop on December 04, 2011 in Gloucester, UK. Founded in 1939, Greggs is the largest bakery chain in the UK with 1,671 outlets.

Shares in Greggs (LON: GRG) plunged 19 percent on Wednesday after a “challenging” March and April.

The poor weather caused by the “Beast from the East” led to the closure of stores and weaker footfall for many of the 1,900 stores across the UK.

“The impact was especially significant in the weeks of severe weather when many shops, including our own, could not be opened,” said the bakery chain.

“The combination of these factors, along with our strong comparative performance in the same period of 2017, has made for a challenging trading environment throughout March and April.”

Whilst seeing a positive start to 2018 with like-for-like sales up 3.2 percent in the first eight weeks of 2018, the group’s performance has since plummetted with growth falling to just 1.3 percent for the 18 weeks to 5 May compared to the 3.5 percent in the same period last year.

Although sales in May have increased, Greggs said that it remains “cautious in respect of the outlook for sales in the balance of the year.”

“We are well positioned to compete for sales in the months ahead with the launch of our new summer menu featuring new sandwiches and salads and we will be extending our offer of value meal deals.  Costs are being controlled tightly with food input cost inflation easing in line with our expectations, and we expect this trend to continue.”

“Taking into account trading conditions in the year to date, and our more cautious outlook, we currently believe that underlying profits for the year are likely to be at a similar level to last year.”

Mike van Dulken, head of research at Accendo Markets, warned of the price competition that Greggs was likely to face if the Asda/Sainsbury’s (LON: SBRY) deal was given the go-ahead.