Greggs' profits fall as heatwave reduces customer visits

In the United Kingdom, the bakery chain Greggs has issued a warning regarding its financial outlook for the year, attributing the anticipated drop in earnings to an unprecedented heatwave that has influenced consumer behavior. Since late June, the UK has experienced exceptionally high temperatures, reaching over 34°C, which has resulted in fewer customers opting for warm food items, particularly the bakery's popular pastries and sandwiches. As a response, Greggs noted a significant slowdown in customer footfall during June, despite overall like-for-like sales for the first half of the year still reflecting a 2.6% increase compared to previous years. Though the firm initially maintained a positive stance regarding its sales performance, the extreme heat drastically changed their projections. The company stated that customer demand shifted towards cold beverages as people sought relief from the high temperatures, thereby reducing the overall number of patrons entering their stores. This shift was significant enough for Greggs to adjust their full-year operating profit forecast downward, indicating that profits would likely be “modestly” lower compared to the previous year’s record of £195.3 million. As the heatwave continued to impact sales patterns, the firm prepared to release its half-year results on July 29, revealing that first-half operating profits would be lower than last year due to stronger trading conditions in the same period from a year earlier. Despite the expected decrease in profits, the board mentioned that although the comparative like-for-like sales might not be as challenging in the latter half of the year, the adverse trading conditions prompted a more conservative outlook. The response of consumers to the heatwave and its effect on buying habits were of primary concern for the company, indicating a need for a strategic recalibration. This scenario illustrates not only the impact of weather on consumer behavior but also highlights the vulnerability of food service sectors to changing climate conditions. People’s preferences during extreme weather can lead to recalibrations in sales forecasts, with Greggs now grappling with a situation that brings both challenge and opportunity as they adapt to a changing market landscape. Looking ahead, the firm will need to consider how seasonal trends influence purchasing behavior and adjust their product offerings accordingly to mitigate the losses experienced during this unusually hot summer.