Bakery chain Greggs has hinted at potential job cuts as the federal government’s furlough scheme ends.
The firm, which employs 25,000 employees, expects enterprise exercise to “remain below normal for the foreseeable future”.
It stated it had reviewed employees prices and was presently consulting with unions and worker representatives.
Greggs stated it needed to scale back the chance of job cuts by placing individuals on diminished hours.
However, it isn’t clear if the corporate will use the federal government’s new Job Support Scheme the place employers and the state high up employees’ pay who’re on fewer hours.
The scheme will exchange the prevailing furlough programme which is coming to an finish on 31 October. The overwhelming majority of Greggs 25,000 workforce had been positioned on furlough throughout lockdown and 1 / 4 remained on the scheme when the corporate introduced its interim leads to July.
In a buying and selling assertion, Greggs stated: “With the Job Retention Scheme planned to end in October we are taking steps to ensure that our employment costs reflect the estimated level of demand from November onwards.”
The firm stated that since reopening all its outlets in July, like-for-like gross sales within the three months to 26 September have averaged 71.2% of the degrees recorded in the identical interval final 12 months.
Greggs stated gross sales in September had been above that common, with a restoration in buyer visits.
However, it stated August was a tough month due to excessive temperatures and it was unable to participate within the authorities’s Eat Out to Help Out scheme as a result of its outlets with seating had been closed.
In addition, common gross sales stay under the 80% stage which Greggs stated in July was wanted for the corporate to interrupt even.
Nevertheless, Greggs is transferring forward with opening a web 20 new outlets this 12 months, which it stated will likely be “predominantly in locations accessed by car”.
The firm stated it had elevated its digital funding throughout lockdown and “click & collect” – which permits clients pre-order and pay on-line earlier than choosing up meals at a store – has now been rolled out in any respect its shops.
It has additionally launched meals deliveries with supply app Just East and stated it’s “seeing encouraging participation levels”.
The firm has greater than 2,000 retailers within the UK throughout metropolis centres, excessive streets and journey areas similar to prepare stations and airports.
The coronavirus pandemic has meant that the variety of individuals utilizing public transport or flying has drastically fallen, whereas a change in authorities steering on employees returning to workplaces will have an effect on footfall for retailers.
Analysis: Navigating a minefield
By Dearbail Jordan, enterprise reporter
Greggs is going through a dilemma that many companies are presently grappling with. Act now to cope with the present buying and selling atmosphere? Or dangle on to see if the tendencies began by the pandemic – such because the accelerated shift to on-line – develop into everlasting?
It is little marvel that the bakery chain hasn’t given any figures on what number of jobs it could minimize or what number of employees will likely be positioned on diminished hours.
When it started consultations with its employees, the federal government’s Job Support Scheme hadn’t even been introduced. Greggs was nonetheless engaged on the idea that the furlough scheme would finish on 31 October.
Throw within the authorities’s modified stance on individuals working from residence and the spectre of a second wave of coronavirus circumstances and it’s almost not possible for corporations to get a gentle sufficient footing on which to make long-term selections.
Hotel Chocolat’s boss Angus Thirlwell says the pandemic has merely sped up modifications in the best way that persons are buying.
But that does not imply operating an organization for the time being is any much less precarious. For Hotel Chocolat, which means avoiding knee-jerk reactions. For companies in all places, it can imply navigating a minefield.
“Greggs will undoubtedly survive and be able to thrive once again,” stated Julie Palmer, accomplice at enterprise consultancy Begbies Traynor. “But its struggles tell the story of every business in the UK.
“What labored earlier than the pandemic might not work throughout it. It, like many others, should adapt and alter to the best way that the world now works.”
‘A lasting legacy’
Separately, confectioner Hotel Chocolat announced that after a strong first half, sales and profits tumbled in the second six months of its financial year as lockdown was imposed.
Overall annual sales for the year to 28 June rose by 3% to £136.2m. Revenue grew 14% in the first six months before sinking by 14% in the second half.
Lockdown meant Hotel Chocolat’s physical shops were closed for Easter, one of its key trading periods. It reported a £6.4m pre-tax loss compared with a £10.9m profit in the previous year.
The firm stated that it had been in a position to react shortly to the altering circumstances.
When its outlets – which usually generate 70% of gross sales within the second half of its monetary 12 months – had been closed two weeks earlier than Easter, it recalled its stock to its distribution centres and was in a position to develop gross sales on-line and thru companions who promote its items.
But Angus Thirlwell, Hotel Chocolat’s co-founder and chief govt, stated that since reopening its outlets, “we are seeing a very patchy picture”.
He instructed the BBC’s Today programme that whereas vacationer spots similar to Shrewsbury, Hitchin, Truro and Chichester had been doing effectively, “the places that are tougher are city centres, transit and tourist-based locations… which is no surprise”.
“All we’re trying to do is disentangle the very short-term kind of impact from the more longer-term shift towards online,” he added.
Asked whether or not the shift from High Street outlets to on-line was everlasting or not, and whether or not retailers needs to be altering their enterprise fashions, Mr Thirlwell stated: “I think there is going to be a lasting legacy from this which is that five years of what was going to happen anyway has just happened in five months.”
He stated it may have implications on “where we should have our Hotel Chocolat locations”, however the firm was additionally attempting to “avoid doing knee-jerk reactions”.
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