The UK’s largest sandwich maker Greencore said sales of food-to-go since the start of the year had dropped more than a third from 2020 as the latest lockdown cut into purchases of sandwiches, salads and sushi.
Shares in the FTSE 250 group fell 2.8 per cent to 113.20p on Tuesday after it reported a 15 per cent fall in overall sales to £312.7m in the final three months of 2020, pushed down by coronavirus restrictions that kept swaths of the population at home.
Patrick Coveney, chief executive, said, however, that the company was preparing for a significant rebound: “We’re confident that when Covid restrictions do ease, our business will bounce back very strongly.”
Food-to-go sales at Greencore, which supplies all the big UK supermarkets along with cafés and food outlets, were down 21.7 per cent in the three months to December from a year earlier. The business has been especially affected by office workers staying home.
The company took a series of cost-cutting measures in the quarter, including cutting discretionary spending, pay freezes, furloughing staff and trimming capital expenditure, while it also secured new debt financing and changes to covenant conditions on its debt. It raised £90m in an equity placing and another £15.5m selling its molasses business.
The Dublin-based company said adjusted operating profit for the quarter would be positive, without specifying a figure.
When restrictions ease, the company expects sales of prepared food to return “pretty strongly, albeit in different locations and through slightly different channels than before”, according to Mr Coveney.
Sales from supermarkets may rise because they can change their ranges to account for people working from home, whereas food-to-go outlets have focused their sites on city centres and are less flexible, he added.
Greencore was also developing new meal kits and making its convenience foods “fresher and more kit-like” to keep pace with the rise in kits and deliveries during the pandemic, he added.
Mr Coveney noted that the 35 per cent drop in food-to-go sales during the current national lockdown was only about half what the company experienced during the initial lockdowns when the pandemic took hold last spring.
Operating profit for the year to September 2020 was down 87.1 per cent to £12.9m because of the coronavirus effect on sales in what Mr Coveney called an “exceptionally challenging year”.
While the company had closed three production sites in the first lockdown, it currently had all its sites open. Greencore had “secured a number of new business wins” during the three months.
Greencore said sales of convenience foods other than food-to-go had been flat year on year since the start of 2021, but the company is still not giving guidance for its full financial year to September because of uncertainty.
Martin Deboo, analyst at Jefferies, said: “With the group trading above break-even and with liquidity benefiting from the placing and disposals, we view this as a reassuring update.”