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Greggs sales boosted by festive bakes

Source: Reuters - Wed 13th Jan 2010

Phenomenal demand for festive savoury bakes stoked a Christmas sales rise at baker Greggs although snow and sub-zero temperatures dented trade at the start of 2010.

The firm, which sells sausage rolls, cakes and bread to over six million customers a week from 1,419 outlets, said on Wednesday sales at stores open for more than a year increased 1.1 percent in the four weeks to December 26 and were up 4.4 percent in the Christmas week.

The increase was driven by strong demand for savouries, particularly festive bakes, described by Chief Executive Ken McMeikan as "a delicious latice pastry, with chicken, stuffing, cranberry and creamy sage sauce." Greggs sold 2 million of the pastries, a rise of 23 percent.

The firm also saw sales of mince pies jump 6 percent to over 6 million, helped by the launch of premium Viennese mince pies.

Other Christmas winners were marshmallow snowmen and gingerbread Christmas trees dipped in chocolate.

Greggs' full-year like-for-like sales rose 0.8 percent, in line with the firm's guidance of "marginally positive" growth in 2009 and it said it expected to report results for the year in line with expectations.

Prior to Wednesday's update analysts were forecasting a consensus pretax profit of 46.7 million pounds for 2009, according to Thomson Reuters estimates, up from 45.2 million pounds in 2008.

McMeikan said Greggs had coped well in the post-Christmas big freeze with only 15 shops having to close.

"Inevitably it will have, for a very short period of time, some impact on sales, but it's not something that we're not able to plan for or able to manage" he said.

The CEO said he was "pretty confident" of achieving positive sales growth in 2010, though like other retailers he is concerned by the prospect of tax increases and a further rise in unemployment after a general election that must be held by June.

Many retailers have struggled during the recession but Greggs, with its relatively low transaction value, has done better than most.

The stock, up 15 percent over the last six months, was unchanged at 9:50 a.m. British time, valuing the business at 432 million pounds.

"Growth opportunities ... will offset tough high street conditions" said Evolution Securities analyst James Wheatcroft.

Last year Greggs detailed plans to open 600 more stores and create 6,000 jobs. Some 50-60 new stores will open in 2010.

"Half the UK population still doesn't have a Greggs near enough to them" said McMeikan.

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