LONDON -- Greggs (GRG 0.28%), the High Street bakery chain, revealed total sales up 4.8% to 735 million pounds in its preliminary results to December 2012, although this included revenue from the opening of 100 net new shops. Like-for-like sales were disappointingly down 2.7%. Pre-tax profit also fell 2.2% to 51.9 million pounds. Greggs' impressive dividend record continued, however, with the dividend per share up 1% to 19.5 pence.
Roger Whiteside, the recently appointed chief executive, commented:
Success in our new business channels coupled with new shop openings saw total sales growing again this year despite challenging market conditions.
We have reshaped our plans for 2013 to focus on our core estate by increasing investment in our successful new formats in "food on the go" and "local bakery." At the same time we will continue to develop sales through new shop openings, and make further progress in new markets through our wholesale and franchise agreements.
Greggs' revenues came under pressure during 2012 as shopper footfall declined in the midst of extreme weather conditions. The bakery shops still rake in the cash, though, to enable a steady increase in the dividend each year, albeit by just 1% this year to keep the trend going. Investors will be hoping for more robust sales figures in 2013 to underpin the dividend growth.
Investment in the form of 121 new shops opened during the year, bringing the total to 1,671 with 118 refurbishments. The chain also expanded into a new "local bakery" format selling the usual favorites in addition to new upmarket breads, cakes, confectionery and pizzas, with new layouts to offer a "more traditional bakery shop experience." This is likely to affect like-for-like performance again in 2013 with increased shop closure periods, but the company will be hoping this shift in direction will ultimately expand their customer base.
Dividends are well covered at around 2 times earnings, and investors will be keenly watching to ensure Greggs can continue to increase those payouts in the future.
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