Greggs Regulatory News (GRG)

9 Dec 2008 07:00



9 December 2008

GREGGS plc

CHIEF EXECUTIVE'S REVIEW AND TRADING UPDATE

Greggs is the leading bakery retailer in the UK, with over 1,400 retail outlets throughout the country.

Over the next two days Greggs will be holding meetings with analysts and investors at which Ken McMeikan, who became Chief Executive in August, will provide details of his initial review of the business and an update on trading since the issue of the interim management statement on 9 October 2008. No material new information will be disclosed in the meetings other than that set out below.

Initial review

Over the past few months Ken McMeikan has completed a review of the business which has confirmed its considerable potential for future growth. The immediate priority will be to simplify the business to prepare for accelerated expansion.

There are significant opportunities for additional Greggs shops across the whole of the UK, and particularly in the South of England and the North West. Greggs will continue to move into more locations away from high streets and shopping malls where it can serve its customers at work and as they travel, though it will also continue to open new shops on high streets throughout the country. 

The review included extensive customer research, which has highlighted that there are also many opportunities for Greggs to develop and broaden its product ranges.

The Group will move to a single Greggs fascia throughout the UK, with its Bakers Oven shops being rebranded as Greggs. This will enable Greggs customers to enjoy instore bakeries and cafés as well as allowing the former Bakers Oven shops to leverage the full benefits of national advertising and buying.

Consultations will also begin with employees in Greggs' 10 shops in Belgium with the intention of withdrawing from the Company's small loss-making operation there. The one-off costs arising from this decision will be shown as an exceptional item in the 2008 accounts and are expected to be in the region of £3.5 million.

Greggs will propose a share split at the next Annual General Meeting in May 2009 in order to enhance the appeal and accessibility of shares to small shareholders and staff.

Ken McMeikan said "My initial review has confirmed the strengths of the Greggs business, its employees and the many opportunities for growth. The Greggs brand inspires great loyalty based on its reputation for value, taste, freshness, quality and friendly service. Over the coming year our priority will be to simplify the business and strengthen its capabilities to ensure that we are ready for accelerated growth and expansion."

Trading update

Total sales in the 25 weeks to 6 December 2008 have increased by 6.6 per cent including like-for-like sales growth of 3.8 per cent. This compares with total sales growth in the first 16 weeks of the period of 6.7 per cent including like-for-like sales growth of 3.9 per cent, as reported in the interim management statement issued on 9 October 2008. 

Ken McMeikan commented "I am pleased with the progress we have achieved given the difficult trading conditions. As ever, the final outturn for the year remains dependent on the important Christmas trading period.  Our customers will not be immune to the effects of the economic downturn; however I believe that our value positioning and great quality products give us a competitive advantage in the current trading climate. As a cash generative business with no debt we are in a strong position not only to weather the current downturn but also to exploit the opportunities for future growth."