Greggs plc · LSE:GRG
Greggs — FY2020 Earnings Presentation
25 slides from Greggs's earnings presentation, March 2021
Slide 1: 2020 Preliminary Results
2020 PRELIMINARY RESULTS For the 53 weeks ended 2 January 2021
Slide 2: Agenda
Agenda Strategic acceleration following Covid-19 response Financial performance Current trading & outlook 2
Slide 3: Strategic acceleration following Covid-19 response
Strategic acceleration following Covid-19 response Roger Whiteside OBE 3
Slide 4: Covid-secure operating model established
Covid-secure operating model established • Massive exercise to equip our operations to open under Covid-secure conditions ahead of reopening in June/July • Second-half sales correlated with differing tiers of restriction around the UK and demonstrated demand for our takeaway food and drinks in all c
Slide 5: Accelerating our strategic plan
Accelerating our strategic plan NEXT GENERATION Beyond GREGGS 2024 2020 c.3,000 UK shops c.2,500 shops/ franchise Explore: <50% high street 2018 2,078 shops - International? Shop multi-format 56% high street 2012 - Brand reach? Click + Collect – 1,960 shops Manufacturing centres customised of excell
Slide 6: Market growth opportunities
Market growth opportunities Grab and Go 3,000 shop New Shops At least 800 Delivery delivery UK target shops Sit In Evening Day Part Better Drive Loyalty Thru availability & scheme Made to Order customisation opens up CRM Click + Greggs Collect Rewards 6
Slide 7: Shop estate: resilient & growing
Shop estate: resilient & growing H2 company-managed shop income £m • 84 new shops opened in 2020 600 (including 35 franchised units) 500 • Closed 56 400 • 2,078 shops in the estate as at 300 2 January 2021 (inc. 328 franchised) 200 160 Location of shop openings 100 140 0 H2 2019 H2 2020 120 100 Town
Slide 8: Delivery: rapid rollout of new channel
Delivery: rapid rollout of new channel • Inversely correlated with walk-in Rapid H2 rollout in number of shops offering delivery trade – strong in lockdowns (extend to 800 in 2021) • 5.5% of company-managed shop sales in Q4 2020. 9.6% in first ten weeks of 2021 • Delivery sales over-index in hot san
Slide 9: Great tasting freshly prepared food
Great tasting freshly prepared food • Award-winning start to 2020 • Demand for Iceland ‘bake at home’ range leapt to record levels • Trend for greater dietary choice shows no signs of slowing, we are well placed to: – offer more vegan-friendly versions of our best-selling lines – move to full labell
Slide 10: Competitive supply chain
Competitive supply chain • Outstanding team response to challenges - Treforest site flood, business closure, management of Covid risks • Ability to manage temporary site closures benefited greatly from our major investment programme over recent years, allowing us to build and distribute from stock a
Slide 11: First class support teams
First class support teams • Investment in modern office working tools has made for efficient remote working • Maintained progress on SAP deployment in supply chain, well positioned to complete roll out in the year ahead. • IT development teams fully engaged in Next Generation Greggs programme: ‒ rap
Slide 12: 12
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Slide 13: The Greggs Pledge – by 2025
The Greggs Pledge – by 2025: Stronger, Healthier Safer Planet Better Business Communities We pledge to play our part in We pledge to become a carbon We pledge to increase the diversity improving the nation’s diet by neutral, zero waste business. of our workforce, and use our helping to tackle obesit
Slide 14: Financial Performance
2021 Financial Performance Richard Hutton 14
Slide 15: Income & expenditure overview
Income & expenditure overview 2020 2019 £m £m Sales 811.3 1,167.9 Operating (loss)/profit* (7.0) 114.8 Finance expense (inc. leases) (6.7) (6.5) (Loss) / profit before taxation** (13.7) 108.3 Income tax credit / (charge) 0.7 (21.3) (Loss) / profit after taxation (13.0) 87.0 Diluted (loss) / earnings
Slide 16: Sales recovery in H2, plus growth in delivery
Sales recovery in H2, plus growth in delivery 120.0% Company-managed LFL sales as % of 2019 level 2020 full-year LFL 100.0% sales decline 36.2% 80.0% Delivery growing, margin % slightly 60.0% lower than walk-in but higher ATV 40.0% Tracking two-year LFL in 2021 will 20.0% provide visibility of progr
Slide 17: Material additional costs & financial support
Material additional costs & financial support • CJRS (furlough) support – £87m claimed for job support in 2020 (H1: £69m, H2: £18m) • Business rates relief - holiday for retail, hospitality and leisure businesses from April 2020. £18.8m benefit for nine months of 2020, due to continue until June 202
Slide 18: Low inflation cost environment
Low inflation cost environment Underlying cost base Food & energy costs People costs Other, 13% • Rate of food, packaging • 3.5% overall wage & Depreciation, and energy cost inflation 6% salary inflation in 2020 eased in H2 2020 People costs, Energy/fuel, 40% • Management pay award 4% • Some reducti
Slide 19: Capital expenditure overview
Capital expenditure overview 2021 2020 2019 Plan Actual Actual £m £m £m New shops and relocations (fitting & equipment) 24.0 12.1 18.6 Shop fitting – refurbishment 1.0 2.8 4.5 Shop equipment (additional and replacement) 14.0 4.7 12.9 Supply chain 25.0 35.1 42.2 I.T. and other 6.0 4.0 7.8 Total capit
Slide 20: Short to medium-term capex requirement rephased due to Covid
Short to medium-term capex requirement rephased due to Covid Retail IT & other Supply chain Pre-Covid plan £m 120 • Plan re-phased following significant 100 reduction in 2020 • Increase in shop opening rate from 2021 80 onwards 60 • Retail refurbishment demands increase in coming years as next gener
Slide 21: Taxation & dividend
Taxation & dividend Taxation: • Effective rate of 5.2% in 2020 reflects impact of disallowed expenses relative to the level of loss for the year, together with the revaluation of deferred tax balances • Introduction of super-deduction capital allowances and the revaluation of deferred tax will impac
Slide 22: Liquidity
Liquidity • £1.5m net cash inflow from operating activities after lease payments (2019: £169.5m) • Net cash balance at end of 2020 £36.8m (2019: £91.3m) • Total liquidity £106.8m (2019: £91.3m) • New revolving credit facility designed to provide protection in further periods of lockdown: ‒ £100m com
Slide 23: Current trading & outlook
Current trading & outlook Roger Whiteside OBE
Slide 24: Current trading & outlook
Current trading & outlook • Positive trend, better-than-expected start to 2021 given the extent of lockdown conditions • Shops in Scotland temporarily closed to walk-in customers for the majority of the year to date • Delivery sales strong in these conditions, 9.6% of total company-managed shop sale
Slide 25: Thank you. Questions?
Thank you. Questions?