Greggs warns of price rises as commodity costs soar
The bakery chain Greggs has warned of spiralling cost pressures as commodity prices surge following Russia’s invasion of Ukraine, adding it will have to raise prices further.
Greggs, best known for its sausage rolls and pasties, is expecting overall cost inflation of 6% to 7% this year, and cautioned that the outlook for many commodity costs remains uncertain. This prompted it to put up some prices at the start of this year, and “further changes are expected to be necessary”.
Roger Whiteside, the outgoing chief executive, said: “Cost pressures are currently more significant than our initial expectations and, as ever, we will work to mitigate the impact of this on customers, however given this dynamic we do not currently expect material profit progression in the year ahead.”
A spokesperson added that Greggs had raised its prices by a “few pennies”, adding 5p to the price of some products, but wanted to remain competitive.
Shares in the company fell nearly 9% on Tuesday morning, making Greggs the biggest faller on the FTSE 250.
The escalating conflict in Ukraine has sent the price of oil, gas, wheat and many other commodities soaring.
The comments came as Greggs swung to a pre-tax profit of nearly £146m in the year to 1 January, from a loss of £13.7m in 2020, its first-ever loss. The profit is higher than its pre-pandemic profit of £108m in 2019. Total sales rose 5.3% to £1.2bn compared with 2019 levels, while like-for-like sales, stripping out new shops, were down 3.3%.
In the first nine weeks of 2022, trading improved, with like-for-like sales up 3.7% compared with pre-pandemic levels in 2020.
The company will pay a special dividend of 40p a share to investors, and resume its profit-sharing programme for staff, suspended last
Read more on theguardian.com
