HIGH street bakery chain Greggs has said it is set to slump to an annual loss and warned profits will not recover until at least 2022 as the pandemic hammers sales.

The Newcastle-based group – which recently axed more than 800 jobs amid the coronavirus crisis – said like-for-like sales fell by nearly a fifth over its fourth quarter to January 2, running at 81 per cent of year-earlier levels.

Greggs said total sales for the year slumped by nearly a third – 31 per cent – to £811 million.

The group said it is braced for annual pre-tax losses of up to £15 million, against profits of £108.3 million the previous year, though it said the hit was contained thanks to Government support.

It said Covid-19 restrictions, which have seen England placed in a nationwide lockdown for the third time, will keep profits under pressure for another year at least.

Greggs said: “The significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance.

“However, we do not expect that profits will return to pre-Covid levels until 2022 at the earliest.”

It comes after Greggs cut 820 jobs at the end of 2020 as it faced sliding sales on battered high streets.

It has since sought to shore up trade by launching a delivery tie-up with Just Eat, which it said accounted for 5.5 per cent of fourth quarter sales.

It said 600 of its shops now provide delivery services to catchments served by Just Eat and this is to expected to increase to around 800 shops in 2021.

The group also confirmed it still hopes to open around 100 new stores, on a net basis, over the year ahead.

Chief executive Roger Whiteside said: “With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking.

“We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well.

“In light of the recent Government announcements, significant uncertainties remain in the near-term.”

Business analyst Ross Hindle, of Third Bridge, has spoken to a number of executives in the food-to-go sector and believes Greggs is well-placed to recover.

He said: “Greggs has taken a battering over the last year but so has everyone in the food-to-go sector. 

"However, relative its peers and expectations, they've cooked up a good Q4 trading performance with like-for-like sales averaging 81.1 per cent of the 2019 level.

"This was driven by a local town store footprint, keeping stores open during the second lockdown, drive-through capabilities, plus a big push into delivery and collect.

“Greggs has moved successfully into online sales since March and whilst these only account for a small proportion of total group sales, online penetration is expected to reach double-digits over the next 24 months.

“Greggs’ investment into its supply chain has allowed the group to respond quickly to the challenges of the pandemic with sensitive product range changes. 

"Also, strong supply chain control has improved cash flow and given the group flexibility for future growth.

“Greggs’ value-targeted product offerings and local town store locations put it in a good position for continued growth and success in 2021.  Who doesn't fancy a veggie sausage whilst they work from home? 

"The big question for Greggs remains around the group's ability to shift its consumer perception away from a purely value proposition and into one where they can charge a price reflective of its improved quality and product offering.”