Greggs Cuts 355 Jobs as Baker Preps for Next Phase of Growthby
Three out of 12 production sites to close in shakeup
$140 million investment to help keep up 30-year sales record
To get bigger, Greggs Plc is slimming down.
The U.K. sausage-roll seller said Tuesday it will close three of its 12 production sites. That and other changes to the way the baker supports its 1,700 shops will result in 355 job cuts. Greggs shares surged as much as 16 percent after the company also reported a 25 percent increase in full-year earnings and said 2016 has had a strong start.
Greggs is trying to maintain a streak of annual sales growth that dates back about three decades. To do that, it will use money from selling the plants to fund a 100 million-pound ($140 million) plan to reinvest in its business. The baker, along with online food-delivery service Just Eat Plc, is benefiting from a change in people’s eating habits as time-pressed Britons cook less and often seek to grab a bite without stopping.
“Investment in the manufacturing network will be another way for Greggs to continue to refresh the menu,” Ali Naqvi, an analyst at Peel Hunt, said in a note.
The company, which is closing facilities in Twickenham, Edinburgh and Sleaford, said it has a goal of being able to support expansion “substantially” beyond 2,000 outlets.
The baker has added soup and salads to its product line-up and improved its coffee offering as it seeks to keep up with changing consumer tastes. It’s also shifting more stores away from shopping streets and nearer to workplaces and travel locations such as train stations and roadside rest areas. Greggs opened 122 outlets and closed 74 last year.
“The consumer outlook remains positive with disposable incomes expected to grow further in 2016,” the company said. Like-for-like sales rose 4.2 percent in the eight weeks ended Feb. 27.
Also capitalizing on the changing habits is Just Eat. Britain’s biggest online food-delivery company reported full-year sales and earnings that beat estimates and forecast growth in 2016 ahead of even the most optimistic analyst projection. The shares gained as much as 7 percent in London.