Britain’s largest specialist retail bakery chain, Greggs, has reported 4.5% drop in its pre-tax profit in the first half of the year, as tough trading conditions and wet weather kept customers away.
Despite the publicity boost due to its corner in the pasty tax row, profits of the bakery chain were down to £16.5 million in the 26 weeks to June 30 from £17.3 million in the same period last year.
A fightback against Chancellor George Osborne’s plans to extend the 20% VAT tax to its pasties and sausage rolls spearheaded by Greggs boss Ken McMeikan boosted company’s profile, but couldn’t stop it reporting a sales decline on Tuesday.
“There’s no question that the profile of Greggs is significantly higher than it was before the pasty tax started. But we were not able to see how much that has benefited sales – the Chancellor announced the tax in March but in April it started raining and didn’t stop,” said McMeikan.
Greggs reported 2.3% dip in like-for-like sales but overall revenues rose to £349.6m from £334.7 million, thanks to the tight cost control. The Newcastle-based group has opened 33 new outlets this year which helped push total sales up 4.5% to £350 million.
Greggs also reported 10% increase in like-for-like sales in its London stores since the Olympics began. The group, which has 1,600 shops in the UK, has announced plans to open 28 franchise stores in Moto service stations, creating 500 jobs, following two successful trials as part of plans to expand beyond the UK high street.