Greggs records £65.2 million of pre-tax loss in H1

Greggs (LON: GRG) revealed to have swung to a loss in the first half (H1) of the current financial year on Tuesday. The company, however, expressed confidence that its sales have almost broken even in the recent week as the British government started lifting COVID-19 restrictions. British Mitie Group also reported an 11% decline in revenue in H1 on Tuesday.

Shares of the company opened more than 1% down on Tuesday and dropped another 1% in the next few hours. At £14.29 per share, the £1.45 billion company that has a price to earnings ratio of 16.81 is currently 40% down year to date in the stock market.

Greggs closed over 2,000 stores due to COVID-19

The British snack foods retailer said that sales in the most recent week at its company-managed stores came in only 28% lower as compared to the same week last year. As per Greggs, it will breakeven once sales recover back to 80% of the 2019 level.  

Before COVID-19, CEO Roger Whiteside commented, Greggs performance in the first two months of 2020 was exceptional. In the latter months, however, the health crisis pushed it into closing over 2,000 of its countrywide stores that remained closed through most of Q2.

As of July, the company has reopened stores, recalled 75% of its workforce, and is now catering to takeaway customers with a limited range of items.

At £65.2 million, Greggs’ pre-tax loss in the first half of the ongoing fiscal year came in significantly weaker than £26.7 million of profit in the same period last year. In terms of sales, the company reported a decline from £546.3 million last year to £300.6 million in the first six months that ended on 27^th June. In comparison, Reckitt Benckiser reported £1.44 billion of pre-tax profit in H1 on Tuesday.

Greggs sees £102.5 million of total cash outflow in Q2

Greggs received financial support from the government to cushion the economic blow from COVID-19 in recent months. Nonetheless, the company valued its weekly cash burn at £4.4 million. In the second quarter, it added, it saw £102.5 million of total cash outflow.

In a bid to further shore up finances, Greggs also issued £150 million of bonds in the first half. The company is currently negotiating over further financing for the medium-term with its banking partners. It is also in talks with landlords for rent reduction.