11 October 2012 Last updated at 11:54 ET

Greggs warns sales will remain weak this year

Greggs

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Greggs, the UK's largest bakery chain, has warned that sales will continue to fall for the rest of the year as customers continue to economise.

Its business has been hit by a combination of weak spending and bad weather since the summer.

Like-for-like sales, which ignore the effect of new shops, fell 2.6% in the last 14 weeks from a year earlier.

"We now anticipate like-for-like sales to remain negative in the final quarter," the firm warned.

Greggs' share price closed 4% lower following the release of the results.

Weather blamed

The 2.6% figure was nonetheless an improvement on the spring, when sales were reported to have fallen 3.5% from a year earlier.

The snack food retailer blamed poor weather in July and flooding in September for much of the poor performance.

Despite the shrinking underlying sales, Greggs' overall revenues rose 5.9% during the last three months by its business expansion.

The chain has opened 70 new stores so far this year, reaching a total of 1,641. It has opened 30 new outlets at motorway service stations.

"Whilst we remain cautious about the economic outlook total sales will continue to benefit from the success of our new shop openings and expansion in wholesaling and franchising," promised chief executive Kennedy McMeikan.

He said that he would seek to mitigate the impact of falling underlying sales on profit margins "through tight control of costs and the increased profit contribution from wholesaling and franchising".