March 23, 2020 / 5:02 PM / 2 months ago

UK baker Greggs to temporarily shut stores, scraps dividend as virus hits

FILE PHOTO: A man walks past a Greggs bakery in Bradford, Britain March 1, 2016. REUTERS/Phil Noble/File Photo

(Reuters) - British baker Greggs (GRG.L) said on Monday it would temporarily shut all its shops and scrapped its 2019 final dividend, citing the impact of the fast-spreading coronavirus on its business.

Earlier this month, Greggs warned that uncertainties over the potential impact of coronavirus were clouding its 2020 outlook, after a stellar 2019 that saw profit jump 27%.

The company had increased its total dividend by 25.8% to 44.9 pence and even said it would consider payment of another special dividend at the time of its interim results, before a dramatic turn of events over COVID-19 prompted the dividend cancellation.

Greggs, which has more than 2,050 outlets in the UK, said it does not expect a rise in year-on-year profit for the current fiscal.

The company will now shutter its shops by close of business hours on Tuesday but said it intends to maintain employment of its workers at full contract hours for “as long as is practicable”.

Greggs said the government’s advice on social distancing has significantly impacted its sales in recent days and added it would cut expenditure to protect liquidity in the short term.

The company also decided to stop a share purchase programme by its employee benefit trust and said it is in the process of arranging financing to cover the possibility of store closures for six weeks to three months.

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Anil D'Silva and Vinay Dwivedi

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