Greggs sales growth goes soft amid challenging conditions on high street

Bakery chain Greggs has reported slowdown in sales growth for the first four months of 2016, which it attributed to challenging trading conditions on the high street.

The FTSE 250-listed company said sales in the first 18 weeks of the year grew 5.7%, compared with a 5.9% rate registered in the corresponding period 12 months ago. Like-for-like sales, meanwhile, rose 3.7% compared with 6% a year ago.

Greggs said the slowdown was due to "softer" conditions on the high street in March, which has seen a number of companies beset by financial issues, although it added the environment has improved over the past couple of weeks. Despite the slower growth in sales, the group said the financial year started well and that it was on track to meet its annual goals.

"Input cost inflation remains low despite increased wage costs and, with a strong pipeline of product initiatives and plans to invest in our shops and supply chain, we expect to make progress in line with our previous expectations," the company said in a statement.

Greggs, which has received positive feedback from customers after it introduced a number of healthier options, added its refurbishing programme was going ahead as planned. During the period, the company refurbished 55 branches amid a total of 200 planned for 2016. In the year-to-date, Greggs has opened 43 new shops, including 23 franchises, and closed 21.

Meanwhile, the group confirmed it will close three bakeries as part of its £100m ($145m, €127m) plan to reorganise its manufacturing and distribution facilities. The site in Sleaford, Lincolnshire, is in the process of being closed down, while bakeries in Twickenham and Edinburgh are expected to close in the fourth quarter of 2016 and in the second quarter of 2017 respectively.