Shoppers' demand for festive treats sees Greggs' sales soar

Like-for-like sales rose 1.1 per cent in the four weeks to December 26 and were up 4.4 per cent in the Christmas week.

The increase was driven by strong demand for savouries, particularly festive bakes – a combination of chicken breast, stuffing and cranberry in lattice pastry. Greggs sold two million festive bakes, up 23 per cent on last year, helped by a Facebook campaign to persuade Greggs to bring the product back.

The firm also saw sales of mince pies jump six per cent to over six million, helped by the launch of premium Viennese mince pies which have a premium shortbread biscuit casing rather than the traditional pastry casing.

Other Christmas winners were marshmallow snowmen and gingerbread Christmas trees dipped in chocolate.

Since the New Year, the group said the severe winter weather across the country had brought particular challenges.

But chief executive Ken McMeikan said staff have coped very well during the cold snap.

"Just 15 of our 1,400 shops have been forced to close for any time at all during the last few weeks of snow," he said. "That's a 99 per cent success rate. We've seen good sales of hot soup and savouries and even a degree of panic buying on bread."

The firm, which sells sausage rolls, cakes and bread to over six million customers a week, said full year like-for-like sales rose 0.8 per cent, in line with the firm's guidance of "marginally positive" growth in 2009.

The group expects to report annual results in line with expectations.

Prior to the update, analysts were forecasting pre-tax profits of around 47m for 2009, up from 45.2m in 2008.

Mr McMeikan said he was "pretty confident" of achieving positive sales growth in 2010.

Like other retailers he is concerned by the prospect of tax increases and a further rise in unemployment after a General Election that must be held by June.

Many retailers have struggled during the recession but Greggs, with its relatively low transaction value, has done better than most.

Evolution Securities analyst James Wheatcroft said of Greggs: "Growth opportunities will offset tough high street conditions."

At the end of last year Greggs unveiled plans to open 60 new stores in Yorkshire as part of an ambitious nationwide expansion programme.

The group is to open 600 stores across the country, creating 6,000 jobs, over the next few years. Of these around 600 staff will be based in Yorkshire in an estimated 8m investment in the region.

The group plans to open between 50 and 60 stores across the country this year and at least 70 a year from 2011 onwards.

Mr McMeikan said there are many parts of the country where Greggs is under-represented.

"Currently more than 50 per cent of the UK population do not have a Greggs nearby. It remains our belief that a further 600 plus shops can be opened in the medium term with little cannibalisation of sales from existing shops," he said.

Greggs will target under-represented areas, such as Southern England and the East Midlands, and open more stores in non-traditional locations such as industrial and retail parks, airports and bus stations.

The group already has a strong presence in Yorkshire from its North Eastern base.

Greggs' plans will require capital expenditure to rise to 50m-60m over three to five years, financed from cash generation.

It will also upgrade its supply chain at a cost of up to 300m.

The development of the supply chain will deliver annual savings of at least 10m a year over time.

The group has run a TV advertising campaign featuring Phoenix Nights star Paddy McGuinness, to promote its value for money deals as consumers cut back on spending.

AIMING TO KEEP IT SIMPLE

Greggs is aiming to cut costs by simplifying the business.

The plan is that 80 per cent of its products should be the same throughout the country – with the remaining 20 per cent dedicated to specialist regional and local favourites.

In Yorkshire these include custard tarts, which have enjoyed strong sales over the past year, and Yorkshire Parkin, the region's large gingerbread cake.

It is also revising its ranges to meet consumer demand for a wider selection of sandwiches without mayonnaise.

Other new lines include a chicken and bacon pasty and chicken fajita pasty, while it has relaunched favourites such as its cheese and onion pasty with a new three-cheese recipe.

The company is the leading bakery retailer in the UK with over 1,400 shops throughout the country.

These serve freshly baked products to over a million customers a day.