Shares of Greggs, the Newcastle-based bakery and “food-on-the-go” retailer, fell about 15% after it said in a trading update that it is “cautious in respect of the outlook for sales in the balance of the year.”
Greggs said its sales rose 4.7% in the first 18 weeks of 2018 compared to 7.4% for the same period of 2017, and company-managed shop like-for-like sales rose 1.3% compared to 3.5% last year.
Greggs, which has 1,900 retail outlets throughout the UK, said trading in March and April had been affected by severe weather.
“At our preliminary results presentation on 27 February we reported a good start to 2018, with company-managed shop like-for-like sales growth of 3.2 per cent in the first eight weeks of the year,” said Greggs.
“In the period that followed market data confirms weak customer footfall in retail locations, which has impacted demand for food-on-the-go.
“The impact was especially significant in the weeks of severe weather when many shops, including our own, could not be opened.
“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.
“Average transaction values continued to grow but we saw a reduction in like-for-like transaction numbers …
“Customers continue to recognise the quality and value of our £2 breakfast offer, with Greggs recently recognised as Britain’s favourite for bacon rolls.
“Our hot food offering is another area of growing customer demand, providing food-on-the-go options for all times of the day.
“Sales of healthier options continue to grow as we extend the menu choice.
“We recently launched two new salads for the summer, Feta and Beetroot Dip with Grains & Lemon and Herb Chicken with Roasted Vegetables and Grains.
“A range of new snack pots have been added to the menu and we also launched our first Balanced Choice sweet option, a Belgian Chocolate Pot.”
In its outlook, Greggs said: “Sales in May have started more strongly than we experienced throughout March and April, however given the uncertainties over market footfall we are 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.”