Greggs saw its share price fall 9.1% in early morning Tuesday trading after the company said it saw like-for-like sales drop and warned on rising costs.
The company reported a pre-tax profit of £145.6 million against a £13.7 million loss in 2020.
Greggs further announced a total sales increase of 5.3% to £1.2 billion as they opened new stores. However, sales fell like-for-like 3.3% on a same store basis.
The food producer reported a diluted earnings per share of 114.3p against a 12.9p loss, alongside a final dividend of 42p per share recommended, resulting in a total ordinary dividend of 57p against the lack of dividend from 2020.
Greggs opened 131 shops in 2021 and closed 28 stores. It currently has a total of 2,181 shops trading from 1 January.
The company is scheduled to open 150 stores in 2022 and reportedly aims to reach 3,000 outlets in time.
“We have started 2022 well, helped by the easing of restrictions,” said Greggs CEO Roger Whiteside.
“Cost pressures are currently more significant than our initial expectations and, as ever, we will work to mitigate the impact of this on customers, however given this dynamic we do not currently expect material profit progression in the year ahead.”
Analysts have warned that rising inflation and labour shortages will result in a more difficult 2022 for the fast food chain.
“Supply chain issues, cost increases, and labour shortages all pose significant and persistent risks for Greggs,” said Third Bridge analyst Ross Hindle.
“Greggs has had to trim its range due to ingredient shortages, now labour shortages might stunt Greggs’ growth ambitions.”
“Investors will be studying how Greggs manages its cost increases, which could turn out to be double-digit, in order to protect its margins in the months ahead.”