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Greggs Plunges Most in Two Years as Sales Growth Slows

Aug. 9 (Bloomberg) -- Greggs Plc, the U.K.’s biggest bakery chain, fell the most in more than two years in London trading after saying sales growth slowed in the first half on “more challenging” trading conditions.

Greggs dropped 27.5 pence, or 5.7 percent, to 454.5 pence at the 4:30 p.m. close, the biggest fall since December 2008. Sales in outlets open more than a year climbed 0.4 percent in the 26 weeks ended July 2 from the same period a year earlier, the Newcastle Upon Tyne, England-based company said in a statement today. Comparable sales growth was 0.8 percent in the first 18 weeks.

Total revenue increased 4.2 percent to 335 million pounds ($547 million). Greggs has added outlets and extended sales of items such as porridge, and bacon and sausage breakfast rolls as the U.K. struggles to emerge from the toughest recession since World War II.

“We had a better than expected April, then a worse than expected May,” said Chief Executive Officer Ken McMeikan in a telephone interview today. “If it had continued as it did in May I’d be more concerned, but June and July have come back in line with expectations.”

Greggs plans to open 80 stores this year even as it faces a “tougher consumer spending environment,” he said.

Net income climbed 40 percent to 18.2 million pounds, as the company reported a credit of 9.7 million pounds relating to changes in its calculation of pension increases. Greggs increased its dividend per share 5.5 percent to 5.8 pence.

Greggs was forced to close 19 of its stores yesterday because of riots on the streets of London. One shop in Peckham was thought to be destroyed after a neighboring store was set on fire, McMeikan said. A shop in Enfield was looted, and a delivery driver was also assaulted. McMeikan said the affect of the rioting on its business would be “very small”.

To contact the reporter on this story: Ben Edwards in London at bedwards35@bloomberg.net.

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net

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