Greggs has warned that profits will be weaker than expected in 2018 after the so-called “beast from the east” kept customers away in March and left the bakery chain unable to open some shops.
The Newcastle-based firm, best known for its sausage rolls and pasties, said that dwindling footfall during the bad weather, as well as a strong comparative performance in the same period of 2017, contributed to a tough trading backdrop throughout March and April.
The bakery chain suffered disruption during the snow storms in late February and March, with delivery vans struggling to reach their destinations and staff unable to make it into work, particularly in Scotland and parts of Wales, which experienced the worst of the weather.
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In an update for the first 18 weeks of 2018, Greggs said it was expecting full-year profit to be roughly unchanged from the £81.8m achieved in 2017. City analysts were forecasting profits of about £87m for 2018.
Shares plunged 18% in early trading to £10.38, making it the biggest faller on the FTSE 250.
“Taking into account trading conditions in the year to date, and our more cautious outlook, we currently believe that underlying profits for the year are likely to be at a similar level to last year,” Greggs said.
Sales growth at shops open for more than a year slowed to 1.3% in the first 18 weeks of the year, from 3.5% over the same period in 2017.
“In the period … market data confirms weak customer footfall in retail locations, which has impacted demand for food on the go. The impact was especially significant in the weeks of severe weather when many shops, including our own, could not be opened,” the company said.
Greggs, which has about 1,900 shops across the UK, said its breakfast and hot food menus were proving popular among customers. The chain said sales of healthier options also continued to grow as it extended the range on offer for the summer.
“Sales in May have started more strongly than we experienced throughout March and April. However, given the uncertainties over market footfall we are cautious in respect of the outlook for sales in the balance of the year,” the company said.