Belfast Telegraph

Wednesday 23 July 2014

Greggs turnaround plan on menu

Bakery chain Greggs is due to update on trading next week.

The new bosses of retailers WH Smith and Greggs will explain their strategies when the two companies report figures next week.

WH Smith's new chief executive Steve Clarke will unveil his first set of annual results for the retailer on Thursday after taking over the top job in July.

He replaced well-respected former boss Kate Swann, following five years as head of the group's high street operations.

His inaugural full-year figures are expected to show further solid progress for the book and stationery chain, with analysts predicting a 5% increase in pre-tax profits to £107 million.

WH Smith has been following a winning formula in recent years of keeping a tight lid on costs and focusing on profitable products to offset sluggish high street trading - a strategy it has repeated in the year to August 31.

The group said in August that its high street business was holding firm despite tough comparisons from a year earlier, when there was a strong book publishing schedule.

It added the travel business had also seen a "good performance" thanks to new business wins in the UK and internationally.

Analysts at Deutsche Bank said Mr Clarke was expected to continue the strategy pioneered by Ms Swann, who turned around the company's fortunes by stripping out sales of DVDs and CDs in favour of stationery, cards, news and books.

They are looking for further details on more cost-cutting and on new travel business contracts.

There may also be an update on its recent trial franchising its brand to independent newsagents as a potential way to expand its network.

Struggling bakery chain Greggs will update the City on the progress of its turnaround plan when it issues its latest trading statement on Wednesday.

The Newcastle-based business, which has already issued two profits warnings this year, is in the midst of an overhaul led by chief executive Roger Whiteside, who was drafted in to lead the company in February.

Greggs said at the time of its latest update that it was hoping for better news in the weeks ahead, after its recovery plan took a knock in the heatwave.

Like-for-like sales drifted 2.9% lower in the first half-year to the end of June though within the period, the second quarter saw an improvement.

However, hopes of further progress were melted away by the sunny weather which saw trading drop off by 3.2% in the first five weeks of the second half, to August 3.

The slump, combined with demand for less profitable cold drinks as temperatures soared, saw Greggs warn that full-year profits would be £3 million lower than previously expected.

But Mr Whiteside said: "We are continuing to make improvements to the products and service in our shops and expect to return to a better trend in sales in the coming weeks."

Forecasts currently predict annual pre-tax profits to fall to around £41 million from £51.9 million.

But analysts from N+1 Singer have expressed confidence in the "firm strategic changes" implemented by Mr Whiteside.

He has put the brakes on new shop openings, launched a refurbishment programme and begun a shift from the traditional bakery format towards the "food on the go" market, as well as extending opening hours.

The catalogue and online fashion firm behind brands including Simply Be and Jacamo is expected to report rising half-year profits on Wednesday after boosting customer numbers and getting its womenswear sales back on track.

Manchester-based N Brown said in July that sales for the first 17 weeks of its half-year were up 7.8% on a like-for-like basis after the sunnier weather helped ladieswear recover from a poor start to the year due to the cold early spring weather.

The sales hike is set to ensure a robust set of interim results - the first for new boss Angela Spindler, the former managing director of Debenhams, who joined in July from discount chain The Original Factory Shop.

Analysts are pencilling in a 7% rise in pre-tax profits to £45 million, with most expecting the buoyant trading seen in July to have continued.

Ms Spindler takes the reins as N Brown benefits from a customer recruitment drive.

The group, which also has brands including swimwear and lingerie range Figleaves and High & Mighty, said in July its push to gain new customers had gone ''according to plan'', with spending remaining at last year's increased rate.

The company is boosting investment in customer recruitment, particularly online through pay-per-click advertising, while cutting back on catalogue mailings.

Online sales are expanding strongly as a result and now account for 56% of total home shopping revenues.

Demand is also increasing among customers of N Brown's younger brands, such as Simply Be, Jacamo and Fashion World.

This is helping offset slower trading among over 50s brands such as JD Williams, where older customers are watching their spending.

Analysts will also be keen for Ms Spindler's views on strategy, in particular e-commerce, international sales and store trials.

Britain's summer heatwave should ensure a strong finish for the owner of Pitcher & Piano and Revere pubs when it reports on full-year trading on Wednesday.

Pubs group Marston's saw like-for-like sales at its 300 upmarket "destination" and premium pubs accelerate 6% in the 10 weeks to July 20 as drinkers quenched their thirst amid soaring temperatures.

That helped the chain make up for flat performance in its estate of about 1,400 tenanted, franchised and managed pubs, which are feeling the absence of last year's Euro 2012 football tournament.

Marston's, which has around 2,100 pubs in total, will report on trading for the year to the end of September, before publishing its preliminary results in late November.

In line with many of its peers, the chain is selling under-performing pubs to focus on a food-based strategy, as it attempts to counter the threat from cheap supermarket alcohol tempting punters to drink at home.

It hopes to have recouped £50 million from pub sales by the end of September.

And the brewer should report more growth in its beer sales, which were up 6% by volume in July, and include Marston's Pedigree and Hobgoblin.

Analysts at Numis Securities expect the chain to step up disposals of non-core pubs, which tend to be less profitable drinks-led outlets - but warn this will hold back profits.

They predict pre-tax profits of £89.6 million for the year, up from £87.8 million a year earlier.

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