Greggs reports sales slowdown

The chain, which operates more than 1,500 outlets and has expanded its range by selling breakfast baps and coffee, said like-for-like sales rose 0.4 per cent in the 26 weeks to July 2 - compared to 0.8 per cent in the first 18 weeks of the period.

And it warned that it does not expect the second half of 2011 to bring any relief, as consumer spending will continue to come under pressure. It only expects like-for-like sales to grow marginally in the year as a whole.

But its expansion plans are on track - Greggs opened a record 39 stores during the period, leaving it on track to open 80 in the year, as it takes up cheap rents on Britain’s beleaguered high streets.

And it plans to make more efficiency savings to help it offset the continuing “very substantial” rise in commodity prices, which are driving up its costs, including its ingredients and energy bills.

Greggs said underlying profits rose 4 per cent to £19.3m, not including a £2m impact of the additional cost of bank holidays around Easter and the royal wedding, which made May a “very difficult month”.