Greggs operating profit climbs in first half

by Eric Schroeder
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LONDON — Pre-tax operating profit at Greggs P.L.C. rose 12% to £18,567,000 ($29,211,000) in the first half ended July 3, up from £16,527,000 in the same period of 2009. Excluding finance income, operating profit totaled £18,472,000 ($29,062,000), up 13% from £16,335,000. Sales rose 3% to £321,333,000 ($505,554,000) in the period, up from £312,360,000.

“We have delivered a resilient first-half performance under challenging conditions with total sales growth of 2.9% and marginally positive like-for-like sales growth, in line with our expectations,” said Ken McMeikan, chief executive officer. “Our accelerated shop opening and refit programs are progressing as planned, and delivering encouraging early results. We are now set to commence the first phase of our supply chain investment programs.

“The pressure on the trading environment looks likely to increase in the second half and we remain focused on managing costs tightly. We now expect an increase in ingredient cost inflation in the second half of the year, following the recent rise in wheat prices.”

Greggs opened 26 new shops in the first half of 2010 and closed 8, giving the company a total of 1,437 units. The company also completed 47 shop refurbishments during the half year, including 8 refitted shops in London.
Mr. McMeikan said Greggs focused its promotional activity in the first half on ensuring that consumers benefit from value offers throughout the day.

“In the first half we have sold more than two million meal deals, up 167% versus last year,” he said. “Our current sandwich meal deal offers a freshly made roll with a choice of fillings, a 500-ml soft drink and a packet of crisps.We have also had a good response to our seasonal promotion of two soft drinks for £1.80 ($2.83).

“We launched our breakfast rolls in February — bacon or sausage in a fresh, Greggs-baked roll — and have now sold 4.5 million, helping to grow our sales in the traditionally quieter early morning period.”

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