The shares of Greggs (LSE: GRG) slumped 7% to 430p during early London trade this morning after the company revealed like-for-like store sales had declined more than 4% since last year.
Greggs, the largest bakery chain in the UK, reported a 3% improvement in total sales, with new shops and additional wholesale and franchise income counter-balancing the performance at the existing stores.
The company blamed "adverse weather" in January and March, as well as "lower footfall across much of the estate", for the disappointing same-store performance, but claimed the trends had been improving during the last two weeks.
The company confirmed it had refurbished 59 stores in the first quarter, with plans to re-fit a total of 250 shops during 2013. Meanwhile, ten new stores were opened, taking Greggs' total shop count to 1,681.
Offering its outlook for the year, the company commented:
"We do not expect a significant improvement in the difficult underlying market conditions in the short term. Although we are only four months into the year, based on current own shop like-for-like performance we believe that profits for the year are likely to be slightly below the lower end of the range of market expectations."
"Despite good cost control, overall profits have been affected in the first quarter of the year and are behind our plan and last year. The business remains highly cash-generative and maintains a strong balance sheet position."
Following today's update, Greggs trades at around 11 times this year's expected earnings and offers a prospective dividend yield of 4.2%.
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