Greggs investment hits profits despite seeing a rise in sale levels

The baked goods retailer said pre-tax profits fell from £75.1m in 2016 to £71.9m last year, despite reporting a 7.4 per cent rise in total sales to £960m over the 12 months to December 30.

Its earnings were knocked by an exceptional charge of £9.9m linked to a major investment programme meant to reshape its internal supply chain.

That is compared with a £5.2m charge in 2016, when it launched the first phase of the turnaround plan.

Chief executive Roger Whiteside said it was a strong performance for Greggs given the “challenging economic circumstances” which saw rising inflation having an impact on both the company costs and customer disposable income.

“At the same time we continued to make good progress with our business transformation programme.

“Whilst the UK consumer outlook remains challenging, we are encouraged by the start to the year. 2018 will be the peak year for investment in our supply chain as we create the platforms for further growth.

“We also plan to open a record number of new shops as we implement our plan to grow Greggs as a leading food-on-the go brand.”

The retailer said it opened 131 new shops over 2017 against 41 closures, meaning it added 90 locations on a net basis, bring the total number of trading stores to 1,854. As part of its transformation programme, Greggs said it also relocated its Yum Yum manufacturing to its Glasgow site.