Greggs first announced plans to reshape its business almost a year ago to the day. Now dwindling profits have made way for healthy food, and even healthier figures.
The well-known bakery chain Greggs decided it was time to reshape its business in 2013, following a fall in like-for-like sales of 2.9 percent on its first half results from the previous year. This led to a slump in pre-tax profits, down £4.6million compared to the same period in 2012, with annual profits predicted to be £3million less than initial forecasts. As a result, the value of shares in the company fell by 7 percent.
Redevelopment puts pay to coffee venture
The underwhelming financial performance prompted Greggs to look long and hard at their business and reshape their model, with a view to putting the foundations in place for long term and sustainable profit growth.
Their turnaround strategy included the redevelopment of 130 to 150 of the chain’s 1,690 outlets across the UK, with the closure of stores that fall within “failing catchments”. There has also been a cessation of Greggs’ tentative venture into the coffee market.
A reversal of fortunes
In the year since Greggs’ turnaround plans were first announced, the high street baker has enjoyed a remarkable reversal of fortunes, with a 48 percent year-on-year increase in pre-tax profits for the first half of 2014.
The company has reported pre-tax profits of £16.9million, up from £11.4million for the same period in 2013, along with an increase in total sales of just over 3 percent, to £373million. However, despite the revival, senior management have been quick to point out that this year’s figures have been flattered by the weak results of 2013. As such, there is still plenty of work left to do.
The boost in performance
Aside from the turnaround plans that have been put into place, one of the primary reasons for Greggs’ improved performance in 2014 has been the warm, dry weather conditions which have increased demand for ‘food on the go’. There has also been a move towards a healthier product range along with an increasing number of seats in stores, both of which have had a positive impact on sales.
Greggs chief executive Roger Whiteside, said: “Whilst our year-on-year performance has benefited from comparison with a period of weak trading in 2013, sales growth is also being driven by initiatives that have further improved our products, availability, service and value.
“Although sales comparables strengthen in the second half, the risk of input cost inflation appears to be reducing. Overall, we expect to deliver an improved financial result for the year and further progress against our strategic plan.”
The success of business turnaround solutions
This tale from one of the high street’s most recognisable brands illustrates just how successful business turnaround solutions can be. For more information about the options available to you and your business, please call 08000 746 757 or email [email protected] to speak to one of our experienced and friendly team.
Written by: Mike Smith