LONDON -- The shares of Greggs (GRG +0.31%) fell 15 pence, or 3%, to 472 pence during early trade this morning after the bakery chain announced the forthcoming departure of its chief executive.
The FTSE 250 company confirmed boss Ken McMeikan is to take charge of Brakes Group, a privately owned supplier of food to hotels, hospitals, and schools.
Derek Netherton, the chairman of Greggs, said:
We are very grateful to Ken for the valuable contribution he has made to Greggs. He has led the company through the major changes that have put us in a strong position for the future with a clear strategy for growth in a difficult environment. We wish Ken well in his new role.
McMeikan became chief executive of Greggs during 2008, after which the group's store count increased from 1,409 to 1,571 to help annual sales advance 12% to 701 million pounds and operating profits climb 20% to 53 million pounds.
During August, Greggs reported sales during the first half of 2012 had risen by 5%, although profits declined by 5% following greater promotional costs.
Earlier this year, McMeikan was a prominent campaigner against the so-called "pasty tax," the government proposal -- now since abandoned -- to introduce VAT on freshly baked savories.
McMeikan said today:
It has been a great honor to lead Greggs since 2008. It is a wonderful company with fantastic people and I am enormously proud of all that we have achieved together. There are many exciting growth opportunities ahead for the business and the team are well placed to deliver them.
For loyal Greggs shareholders, McMeikan will be thanked for keeping the company's illustrious dividend record intact.
The firm floated during 1984, and the payout has been raised every year since to create a superb 27-year run of consecutive increases. Between 2001 and 2011, the dividend has compounded at 11% a year.
Prior to today, City experts that followed Greggs were expecting current-year earnings of 39.5 pence per share and a dividend of 20 pence per share. The projections place Greggs' shares at 12 times potential profits and on a yield of 4.2%. Given the company's reliable record, those ratings do not look too demanding.
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