UPDATE 1-UK's Greggs warns on profit as high street struggles

Mon Apr 29, 2013 4:10am EDT

* 2013 pretax profit seen below 47.5 mln stg

* 17 weeks to April 27 own store lfl sales down 4.4 pct

* Total sales up 3.0 pct

* Shares fall up to 9 pct

LONDON, April 29 (Reuters) - Greggs, Britain's biggest seller of food-on-the-go, warned on year profit, blaming a sales fall on fewer shoppers visiting high streets, exacerbated by snow in January and March.

Shares in the company, which has more outlets in Britain than burger chain McDonald's, fell as much as 9 percent on Monday after it said pretax profit for 2013 was likely to be "slightly below" the lower end of market expectations of 47.5-55.2 million pounds ($73.6-85.5 million).

British retailers are battling a prolonged squeeze in consumer incomes as the government tries to reduce it deficit.

Even with its relatively low average transaction value of just over two pounds Greggs, which sells bread, sandwiches, savouries, cakes and pastries to over 6 million customers a week, has not been immune to the economic downturn.

"Essentially we've seen lower customer footfall across much of the estate," Chief Executive Roger Whiteside told reporters, adding: "We see no real sign of significant improvement in this underlying trend in the short term."

Greggs said sales at stores open over a year were down 4.4 percent in the 17 weeks to April 27, though they had improved to be down 1.5 percent in the most recent two weeks as comparisons with 2012 became easier.

A higher proportion of promotional deals also meant a slight impact on margin, a trend it expected to continue.

The 1,681-store firm said total sales in the period rose 3.0 percent, driven by a net 10 new shop openings and a 2.9 percent increase in wholesale and franchise sales.

The profit warning came on the same day broadcaster Sky is launching a TV series about Greggs entitled: 'Greggs: More than meets the pie'

Shares in the firm were down 32.8 pence at 429.5 pence at 0750 GMT, valuing the business at 435 million pounds.

"We think that lower footfall on the high street is structural and that Greggs needs to re-focus its business faster than it currently plans," said Panmure Gordon analyst Philip Dorgan, who cut his price target from 550 pence to 450 pence.

Last month Whiteside said the firm was sprucing up its stores to persuade cash-strapped shoppers to visit.

So far this year it has refitted 59, in line with a plan to do around 250.

The CEO is also focusing new shop openings on locations less impacted by lower shopper footfall such as workplaces, travel and leisure destinations.

"There are fewer customers about shopping. What we've got to do is attract more of those customers to Greggs," he said.