Shareholders in Greggs are to share a £20m special dividend after the bakery chain’s sales beat its expectations.
Sales at shops open a year or more rose by 5.9% in the 16 weeks to 25 April as customers warmed to freshly made sandwiches and products with less than 400 calories, Greggs said. Total sales increased by 5%.
Under its chief executive, Roger Whiteside, Greggs has broadened its range and has refurbished its stores. It has pushed coffee sales, introduced free-range omelettes and porridge for breakfast and added extra seating to branches. The bakery chain has traditionally been known for its sausage rolls, pies and pasties.
Greggs said its strong start to the year was helped by consumers having more cash to spend and by lower costs for raw materials. Falling oil prices have helped increase disposable incomes in the UK while cutting the cost of food ingredients.
The company said: “We expect market conditions to remain favourable and support a good first-half performance, ahead of our previous expectations.”
Following a strong second-half sales performance in 2014, costs may not be as favourable in the same period this year. But Greggs said it expected to do well.
The company said that after a review of its capital structure it had scrapped a planned share buyback and would instead pay a special dividend of 20p a share totalling £20m on 17 July. The shares rose 2.3% in early trading on Wednesday and were among the biggest gainers in the FTSE 250 index.
Greggs was in the doldrums two years ago and was forced to publish two profit warnings in 2013. Whiteside’s overhaul helped push profits up 41% last year and the revamp will continue with improved salads and a summer berry fruit pot, Greggs said.
