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Greggs can survive even if it doesn’t sell another sausage roll this year

Greggs

Greggs believes it is able to access enough credit to make it through the coronavirus even if its shops could not open for the rest of the year.

The 2,000-srong bakery chain, which exceeded sales of £1 billion for the first time last year, has now put in place the necessary processes and documentation to establish a commercial paper programme and received confirmation from the Bank of England that it is eligible to issue paper under the Covid Corporate Financing Facility (CCFF) scheme.

The Greggs board considers that the credit available to it under the scheme is sufficient to meet the company’s liquidity needs for a prolonged closure period, “including a scenario where our shops are unable to trade for the rest of the year”.

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It has partially accessed the liquidity available to it under this facility by issuing commercial paper at a value of £150m and with a duration of 11 months.

In a statement at the end of March, Greggs estimated that the impact of its shop operations remaining closed for a prolonged period would be a net weekly cash outflow of £5m, plus property rental costs of £11m each quarter.

Having now had clarification of the details of the Government’s Job Retention Scheme and following further examination of its cost base, the company said it now expects that, after it has met its existing liabilities relating to recent trading and its capital investment programme over the near term, the net cash outflow while closed will be around £3.5m per week until the end of June.

From July onwards the cost is anticipated to be £4.5m per week including the cost of all property rents, which it expects in future to pay monthly in advance.

Chief executive Roger Whiteside said: “Our cash at bank position is currently £47m, before receipt of CCFF funding. Whilst many uncertainties remain, we have ensured that Greggs and its many stakeholders will be well-supported through this difficult period and that the company will be in a position to return to profitable growth as soon as conditions allow.”

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Tags : bakerycoronavirusGreggs
Andrew Seymour

The author Andrew Seymour

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