Greggs feels the warmth as customers shun pastries in sizzling June

[ad_1] The UK’s largest bakery chain, Greggs, has mentioned final month’s heatwave harmed its gross sales and income as clients went off the thought of sizzling pastries within the unusually excessive temperatures.

Shares in Greggs slumped virtually 13% as buyers reacted to the revenue warning a day after the UK skilled the most popular day of the 12 months to this point, with temperatures reaching as excessive as 35C.

The group mentioned that gross sales on the 2,085 retailers it operates immediately grew 2.6% within the six months to twenty-eight June. Nevertheless, “good progress in Could [was] adopted by slower development … as excessive temperatures impacted client spending buying patterns”.

Greggs mentioned: “Gross sales in June have been impacted as very excessive temperatures affected the UK, growing demand for chilly drinks however decreasing our general footfall.”

The bakery chain mentioned that complete gross sales within the first half have been up 6.9% 12 months on 12 months to £1bn, because it targets opening 140 to 150 new shops this 12 months.

Nevertheless, Greggs mentioned that the influence of the heatwave up to now meant it now anticipated full-year working income to be “modestly under” the extent achieved final 12 months.

“Sausage rolls might not be the very first thing customers yearn for when temperatures get into the 30s, and that’s been the case for Greggs,” mentioned Derren Nathan, the top of fairness analysis at Hargreaves Lansdown.

“Whereas chilly drink gross sales have been up in June, when clients flake within the warmth, flaky bakes aren’t first alternative on the menu and footfall declined for the month. That’s taken the sheen off like-for-like gross sales, which have been up a decent 2.6% within the first half.”

In Could, Greggs reported a pickup in gross sales after its profitable growth into iced drinks, pizza bins and a macaroni cheese that went viral on social media.

The bakery, which is headquartered in Newcastle upon Tyne, mentioned on the time that gross sales development was additionally being boosted by the sunny climate.

Nevertheless, since then the UK has notched up the second warmest June on document – the warmest ever in England – whereas the Met Workplace confirmed that 34.7C was recorded at St James’s Park in central London on Tuesday afternoon.

The chain’s share worth is down greater than 38% to this point this 12 months amid broader considerations round slowing gross sales development.

skip previous e-newsletter promotion Signal as much as Enterprise As we speak

Get set for the working day – we'll level you to all of the enterprise information and evaluation you want each morning

Privateness Discover: Newsletters could comprise information about charities, on-line adverts, and content material funded by outdoors events. For extra data see our Privateness Coverage. We use Google reCaptcha to guard our web site and the Google Privateness Coverage and Phrases of Service apply. after e-newsletter promotion

This 12 months Greggs elevated the worth of its sausage rolls by 5p to £1.30, blaming wage, tax and meals value rises. It fashioned a part of a median 4% worth rise on key gadgets together with espresso and doughnuts.

The corporate mentioned it had no alternative however to cross on the rising value of its wage invoice to customers after two-thirds of its employees obtained a 6.1% pay rise in January

Greggs manages 2,085 retailers, whereas 564 are franchised.

The corporate mentioned that within the first half of this 12 months it opened 87 new retailers, whereas closing 56, and “remained assured” of reaching 140 to 150 internet new openings this 12 months.