Greggs PLC (LON:GRG) confirmed it is not paying an interim dividend as it reported half-year results with its sales still down a third from last year following the coronavirus (COVID-19) pandemic lockdown.
The high street baker said it has brought around 75% of staff back from furlough as it is trading broadly at operating cash breakeven, pointing out that it will reach breakeven in profit terms when sales recover to 80% of pre-pandemic figures.
READ: Greggs to reopen 800 shops this week, sales expected to be lower than normal
Not distributing a dividend is expected to save £33mln, as the FTSE 250-listed firm is also looking to pay back funding received from the government during the crisis.
Net cash outflow in the quarter to June was £102mln, the group said, including a cash burn of £4.4mln per week during closures.
Protective workwear and other equipment to enforce social distancing measures cost it £2.5mln in the first half and is expected to come in at £5mln in the second half.
For the six months to June 27, 2020, Greggs said its sales dropped by 45% to £300.6mln for a pre-tax loss of £65.2mln, against last year’s £36.7mln profit. Net debt at the end of the period was £26.2mln.
No 'work from home' crowd
“Greggs has thrived by appealing to two distinct groups of people. First is the work crowd – people pop into its shops for a coffee and a bacon roll on the way to work... The second crowd is those going around the shops, popping into its stores for a cup of tea and a cake as part of their trip," Russ Mould, investment director at AJ Bell, noted.
“Although people are slowly starting to return to shops, Greggs will almost certainly be suffering from so many individuals continuing to work from home rather than going back to the office. There is nothing it can do to reverse this trend.”
Shares slid 3% to 1,421.92p on Tuesday morning.
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