Greggs considers additional funding in view of lockdown risk

29th July 2020 (Last Updated July 29th, 2020 11:50)

British bakery chain Greggs has asked the banks for extra financing to prepare itself for another possible lockdown due to a rise in Covid-19 infections later this year.

Greggs considers additional funding in view of lockdown risk
Credit: Paul Robertson.

British bakery chain Greggs has asked the banks for extra financing to prepare itself for another possible lockdown due to a possible rise in Covid-19 infections later this year.

Earlier this week, British Prime Minister Boris Johnson warned of a possible spike in Covid-19 cases at the end of the year and said that the government would seek to avoid a second national lockdown.

Greggs finance director Richard Hutton told the publication that the additional funding will leave the company with greater liquidity to draw in the event of another lockdown.

The bakery chain is not planning to borrow more than the £150m that it had taken out under the UK Government-backed corporate loan scheme in April.

Greggs revealed that it suffered a pre-tax loss of £65.2m in the first half of the year after closing over 2,000 stores in the wake of the pandemic and the revenues collapsed by 45% to £300m.

The company, which recorded a profit of £36.7m last year, does not expect to return to pre-pandemic patterns, while social distancing measures are in place.

It plans to launch delivery services at 250 of the locations in the next few months and scale up the concessions in Asda supermarkets.

Furthermore, Greggs is planning not to pay last year’s dividend, and instead, preserve the £33m in cash due to the pandemic crisis.

The company is also considering making job cuts after the government’s furlough scheme ends and if the demand does pick up to pre-pandemic levels.

Gregg chief executive Roger Whiteside said he expected to take another £20m to £25m in support from the furlough scheme until October when it is due to end.

The company reported the highest UK sales in 2018.