Greggs and Topps Tiles warn new lockdowns will hit sales

Tom Belger
·Finance and policy reporter
·3-min read
A customers food on the counter before they collect it as Greggs bakery reopens 800 stores nationwide. Greggs closed all of their bakery's due to the lockdown which was imposed across the UK due to the COVID-19 pandemic.  On June 18, 2020 in Southend-on-Sea, England. (Photo by Jacques Feeney/MI News/NurPhoto via Getty Images)
Greggs released a trading update, predicting losses. Photo: Jacques Feeney/MI News/NurPhoto via Getty Images.

Greggs, Topps Tiles and Auto Trader joined the chorus of firms warning of the hit to trade from coronavirus restrictions as England’s lockdown came into force on Wednesday.

The bakery chain (GRG.L) told investors it did not expect profits to return to pre-COVID levels until 2022 “at the earliest,” highlighting uncertainty over how long social restrictions will last.

It comes as strict stay-at-home orders are applied across the UK, and as England’s chief medical officer Chris Whitty told the country on Tuesday some restrictions could be in place next winter.

Greggs confirmed in a trading update that 820 staff had been made redundant in recent months, and predicted pre-tax losses of up to £15m for 2020. Its full-year preliminary results will be published in March.

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It said sales in company-managed shops had slumped 18.9% in the fourth quarter of the year, compared to a year earlier.

The pandemic has seen the chain ramp up delivery options through a partnership with Just Eat, with 600 shops providing local delivery and expansion planned to another 200 shops in 2021.

It also expects to add another 100 stores in the year ahead, “subject to prevailing market conditions.” Investors appeared relieved by the update, with stocks surging more than 6% in London.

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Meanwhile Topps Tiles (TPT.L) said it had been advised to close its tile aisles in stores “to prevent browsing” during England’s lockdown, even though stores can remain open building supplies are exempt from restrictions.

“We expect to see an impact on sales during the period of tighter restrictions and trading margins will come under some pressure due to the additional delivery costs associated with higher levels of online sales,” it said in its own trading update.

Shares dipped 0.5% on Monday despite the company reporting it is debt-free and enjoyed “good growth” among both homeowners and professional fitters. Like-for-like sales were up 19.9% in the three months to Boxing Day, versus declines of 5.4% a year earlier.

Auto Trader (AUTO.L), which says it is Britain’s biggest online car seller, told investors it too expected “sales volumes to be impacted in January and February” as a result of lockdown.

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The company noted the latest restrictions had “once again” forced all car retailers to close showrooms. It said it would provide advertising packages for its customers for free in February, costing it up to £7m a month.

But it noted car buying demand had remained strong in its third quarter between October and December, with visits up 20% on the previous year.

Auto Trader shares were trading 0.1% lower in early trading.

A string of business lobby groups have warned the latest restrictions will be a “body blow” to firms facing fresh closures or severe damage to trade in recent days.

Industry chiefs said firms face “hardship,” rising debt and rising job losses, while economists now predict a double-dip recession for the UK.

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