By James Davey
LONDON (Reuters) - Greggs (L:GRG) plans to close three bakeries and cut up to 355 jobs as part of a 100-million-pound restructuring programme, the British baker announced on Tuesday.
The Newcastle-based firm sells sandwiches, sausage rolls and pastries from about 1,700 retail outlets in the UK, more than burger chain McDonald's (N:MCD), and sees scope for substantially more than 2,000.
It said on Tuesday that to support that planned growth it needed to reshape its supply chain.
Greggs plans to this year close bakeries in Edinburgh, Twickenham in southwest London and Sleaford in central England, and use the proceeds to increase capacity at its nine remaining bakeries.
"These are difficult changes that we believe are needed to support the long-term growth of the business," Chief Executive Roger Whiteside said.
Whiteside, CEO since 2013, is two years into a five-year plan to convert the firm from a traditional bakery business to focus on Britain’s more than 6-billion-pound-a-year market for food on the go.
Less than 3 percent of Greggs' total sales now come from bread.
Greggs on Tuesday reported a 25 percent rise in annual profit, a 30 percent hike in its dividend and improved current trading, sending its shares up by 8.5 percent.
It met forecasts with a profit before tax and one-off items of 73 million pounds in the year to Jan. 2, up from 58.3 million pounds. Sales rose 5.2 percent to 835.7 million pounds, with those at shops open more than a year up 4.7 percent.
Greggs is paying a total dividend of 28.6 pence, up from 22 pence, and paid a 20 pence special dividend in July.
The company highlighted particularly strong sales growth in sandwiches, new healthier ranges such as salads and 'no added sugar' drinks. Soups and coffee also sold well.
Like-for-like sales increased 4.2 percent in the first eight weeks of its new financial year, recovering from a fourth-quarter dip, and the firm forecast another year of underlying growth.
"The fundamentals are that inflation remains very low, people are getting (rising) pay awards and therefore disposable incomes continue to rise," Finance Director Richard Hutton told Reuters.
"The outlook for commodity inflation, in terms of food inputs and fuel remains very positive," he said.
