High street bakery chain Greggs has warned it expects to post the first ever loss in its history due to the coronavirus pandemic and will not see profits recover until at least 2022.
The Newcastle-based group – which recently axed more than 800 jobs amid the crisis – said it is braced for annual pre-tax losses of up to £15 million, against profits of £108.3 million the previous year.
It will mark the first loss since it was founded more than 80 years ago and comes after sales have been hammered by the pandemic and lockdowns across the UK.
Greggs – which has 2,078 shops – saw like-for-like sales fall by nearly a fifth over its fourth quarter to January 2, running at 81% of year-earlier levels.
Greggs said total sales for the year slumped by nearly a third – 31% – to £811 million.
It said Covid-19 restrictions, which have seen England placed in a nationwide lockdown for the third time, will keep profits under pressure for another year at least.
Greggs said: “The significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance.
“However, we do not expect that profits will return to pre-Covid levels until 2022 at the earliest.”
It comes after Greggs cut 820 jobs at the end of 2020 as it faced sliding sales on battered high streets.
But shares lifted 8% as the expected losses are lower than feared and thanks to improving sales.
Sales were down as much as 29% year-on-year in its third quarter.
Greggs has sought to shore up trade by launching a delivery tie-up with Just Eat, which it said accounted for 5.5% of fourth quarter sales.
It said 600 of its shops now provide delivery services to catchments served by Just Eat and this is expected to increase to around 800 shops in 2021.
The group, which was founded in 1939, is drawing up a new menu to help boost delivery demand, including a range that would appeal more in the evening, though it is keeping details under wraps.
The group also confirmed it still hopes to open around 100 new stores, on a net basis, over the year ahead.
Chief executive Roger Whiteside said the group wants to “come back stronger than we’ve ever been” and open in areas where it does not have a presence and in particular those sites accessible by car.
Half the new stores will open with franchise partners, largely in petrol stations, while it is also targeting retail parks and transport hubs – but also city centres such as central London.
Mr Whiteside said the group remained committed to high streets and said they would bounce back in time despite the shift to remote working in the pandemic.
“Greggs will be present in city centres for the foreseeable future… I can’t imagine a world where we won’t be in city centres,” he said.
But retail expert Clive Black, at Shore Capital, said the pandemic cast a cloud over Greggs’ future on the high street due to the switch to home working.
It is a “game changer, which most probably notably reduces the long-term growth potential of the group”, he warned.