finance

Greggs to cut jobs as high street lays bare Covid financial hit


The bakery chain Greggs has said job cuts in its stores are inevitable as a string of household names laid bare the damage done to their finances by coronavirus.

Greggs said on Tuesday that workers in half its 2,039 shops would be affected as it tries to slash its wage bill before the government’s furlough scheme is withdrawn next month.

Roger Whiteside, the Greggs chief executive, said the baker was negotiating reduced working hours with staff but with sales “well down” in struggling city centres it would be impossible to avoid redundancies.

The high street has been one of the worst-hit sectors of the economy, with nearly 125,000 jobs lost in 2020 as retailers shut stores and in some cases went into administration. Greggs’ upmarket rival Pret a Manger has already axed 2,900 jobs while SSP Group, which owns Upper Crust, is cutting up to 5,000.

Whiteside said Greggs was more resilient as the vast majority of its customers were not office workers. More than half its stores are in towns and suburban locations while only about one in seven are in hard hit city centre and travel hubs. Nonetheless, with trade down 25% on a year ago, it is still having to cut costs.

“About half our shops have got higher contracted hours than we’re going to need by the time furlough ends,” explained Whiteside. “We need to negotiate lower hours. If we can be successful in that it will minimise the extent to which we have to remove roles.” Greggs employs 25,000 people, the majority of whom work in its shops.

Rishi Sunak’s new job support measures would be of only limited use to the company, said Whiteside. He added that Greggs was “very grateful” for the furlough scheme, but it now had to adapt to straitened times.

“It’s not viable to keep going [with furlough] if you don’t envisage demand coming back to pre-Covid levels anytime soon,” he said. “You’ve got to resize your business to match the level of demand you anticipate will prevail until this crisis comes to an end.”

The Greggs update came as no frills greeting cards chain Card Factory announced a loss of £22m after sales halved to £100m in the six months to 31 July. The picture is much better now, with sales running down just 7%, but Paul Moody, its executive chairman, said it could not predict the level of profitability in the second half.

Any high street recovery remained “sensitive to spikes in Covid-19 cases and potential local or national restrictions”, which affected customer footfall and shopping habits, Moody said.

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The widespread disruption also took its toll of upmarket chocolatier Hotel Chocolat, which fell to an annual loss of £6.5m on the back of a £10m write-down, the majority of which related to 30 store leases that are no longer worth what they once were. The turmoil in the travel industry also knocked £2.7m off the book value of the luxury hotel and cocoa farm in St Lucia the chocolatier describes as its “spiritual home”.

Angus Thirlwell, the chief executive, said that all but five of its 130 shops were now open, but sales were down on last year. Shoppers were instead visiting its website to get their chocolate fix, with online demand up 150% over the last three months.

The shift to home-working had hit impulse purchases of its upmarket chocolate treats, particularly in London, and Hotel Chocolat is trying to agree rent reductions with its landlords. Its store opening programme is on hold but Thirlwell said the company “loved physical retail” and had no current plans to close any locations.

Despite the plan to cut jobs, Greggs is restarting its expansion with plans to open another 20 stores this year, mainly in locations such as petrol forecourts, retail parks and supermarkets rather than the high street. Before the pandemic it had planned to open 100 new shops this year. The new stores may provide roles for workers affected by the job cuts programme.



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