30 July 2019 | UK

Greggs warns ‘disorderly’ Brexit could undermine strong sales performance

UK bakery, food-to-go and coffee chain credits Fairtrade coffee, breakfast and new hot food options for sustained strong performance, but warns improved trading conditions could be undermined by a no-deal Brexit

Greggs has indicated Brexit looms over its strong-half year results

Greggs has reported a 14.7% rise in sales to £546m during the 24 weeks ended 29 June. Like-for-like sales rose 10.5% during the period with underlying pre-tax profit rising to £40.6m from £25.7m.

In a press statement, the bakery and coffee chain said sales had been buoyed by the growing popularity of its fresh-ground Fairtrade coffee, a fast-growing breakfast offer, and the sustained popularity of its vegan sausage roll.

“Greggs has delivered an exceptional first half performance, building on the strong finish to 2018. We have continued to make strategic progress with our programmes of investment in infrastructure to support future growth and in developing the products and channels to market that will help achieve our ambition to be the customers’ favourite for food-on-the-go,” said Greggs Chief Executive, Roger Whiteside.

The bakery and coffee chain also indicated a softening of trading conditions on the UK high street, which it said had improved due to a high employment rate, increasing levels of disposable income and stabilised weather compared to 2018. However, the chain also used its press statement to issue a warning on the adverse impact a hard Brexit could have on its supply chains and operations:

“The negotiation of the UK’s exit terms from the European Union continues to present significant uncertainties in the months ahead, with the potential impact that a disorderly exit might have on supply chains, tariffs, exchange rates and consumer demand. As disclosed at the time of our preliminary results in March, we are building stocks of key ingredients and equipment that could be affected by disruption to the flow of goods into the UK.”

The warning over the prospect of a no-deal Brexit reflects sentiment expressed throughout the UK’s branded coffee shop segment. 49% of industry leaders surveyed by Allegra in 2018 indicated Brexit was negatively affecting their business, with 46% remaining neutral and 5% reporting a positive impact. 69% agreed it was negatively impacting consumer confidence, while 87% of industry leaders surveyed believe Brexit has damaged the UK economy.
 

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