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Earnings

Britain's Greggs to cut jobs as COVID-19 dents demand

LONDON (Reuters) - British baker Greggs GRG.L will cut shop staff jobs and hours as it expects trading to remain below normal for the foreseeable future due to the COVID-19 pandemic.

FILE PHOTO: Social distancing signs are seen as a customer leaves a Greggs store that reopened today in Newcastle, following the outbreak of the coronavirus disease (COVID-19), Newcastle, Britain, May 27, 2020. REUTERS/Lee Smith

Greggs, best known for its sausage rolls, steak bakes and vegan snacks, said on Tuesday it had launched a consultation with union and employee representatives and was aiming to minimise job losses by negotiating reduced staff hours.

It joins a swathe of companies cutting jobs, particularly in retail and hospitality, as the government moves to replace its initial employment retention scheme with a less generous one.

“The dilemma here is about demand ... If the customers aren’t there, there’s no point having the people there to serve them,” CEO Roger Whiteside told Reuters.

He didn’t know yet how many of Greggs’ 25,000 workers would lose their jobs. “It all depends on how many people say ‘OK I’m happy to do the fewer hours,’” he said.

Greggs was performing well before the pandemic, with its shares hitting a record high of 2,550 pence in January. They were down 2.6% to 1,187 pence at 0755 GMT, extending 2020 losses to 48%.

The group, which trades from over 2,000 outlets, said like-for-like sales in company-managed shops averaged 71.2% of their 2019 level in the 12 weeks to Sept. 26, and 76.1% in the last four weeks of that period.

“The outlook for trading remains uncertain, with rising COVID-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home,” it warned.

Last week, Prime Minister Boris Johnson told Britons to work from home where possible and the government is mulling further restrictions.

The pandemic has seen Greggs speed up innovations aimed at reaching more customers. Home delivery, in partnership with Just Eat TKWY.AS, represented 2.6% of shop sales in the week to Sept. 26, while a click and collect service is now available in all shops.

Looking beyond the pandemic, Greggs is restarting its shop opening programme, and now expects about 20 net openings in 2020.

Reporting by James Davey; editing by Jason Neely and Mark Potter

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