A BETTER-than-expected performance from Baker's Oven enabled Greggs to
report annual profits well ahead of City expectations at #12m before
tax. This pushed up the shares 50p to 1118p.
Baker's Oven was loss-making before it was acquired by Greggs but the
lower cost structure and stock mix at Greggs has enabled it to be turned
round and it made an operating profit of #1.9m.
The acquisition boosted Gregg's retail chain to 930 shops. There was
underlying sales growth in Greggs of 1%. Its sales of bread and rolls
continued to be affected by the availability of cut-price alternatives
but there was good demand for its sandwiches and savoury products.
During the year 20 Greggs shops were opened. Nine of the 424 Baker's
Oven outlets acquired were closed in the year with a few others also
likely to close. Despite the acquisition and record capital expenditure
of #15m, Greggs remains in a strong financial position with net debt of
only #600,000 at the year-end.
The larger-than-expected 27.8% rise in the total dividend to 23p had
City analysts scurrying to upgrade their 1995 profit forecasts.
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