Bakery chain Greggs has announced it will reshape its business following a 2.9% drop in like-for-like sales in its 2013 first half results.
As a result, pre-tax profits fell £4.6m to £11.4m compared to the same period in 2012, with annual profits estimated to be £3m lower than expected.
Greggs shares fell 7% following the announcement of its interim results.
Chief executive Roger Whiteside, who took over the company in March, said: “Our focus for the future will be on winning in the growing ‘food on the go’ market.
“As a consequence, we will spend the next two to three years reshaping the business as we build the platform for long term sustainable profit growth for the benefit of shareholders, employees and the wider community.
“Whilst Greggs has defended its position as the leading retail bakery business it has underperformed the food on the go market as new entrants and existing competitors have rapidly expanded shop numbers and better met customer demands.”
The company currently operates two shop formats: a ‘food on the go’ format and a ‘local bakery’ format. Greggs now plans to combine the best aspects of both concepts into its new ‘bakery food on the go’ format, which is currently employed at nine of its stores.
Sales were hit by both cold weather conditions at the start of the year and in recent weeks by the July heatwave, with the popularity of lower margin cold drinks also affecting profits.
The chain operates 1,690 outlets across the UK and will focus on the redevelopment of 130 to 150 shops by the end of 2013. However, stores within “failing catchments” will be closed.
Its venture into the coffee market will not be continued, following the launch of a ‘Greggs Moment’ brand. Whiteside said the company will instead “aim to incorporate the existing ‘Moment’ shops, wherever possible, back into the core Greggs estate.”