Greggs returns to sales growth – and cuts more than 400 jobs

Greggs emerged as a winner from Christmas trading but it will not be a happy new year for more than 400 of its employees who face losing their jobs.

In a trading update, the bakery chain said underlying sales for the five weeks ending 4 January rose 3.1% in a return to growth after a difficult start to the year.

But it said 300 branch staff were in line to lose their jobs because of a decision to scrap in-store bakeries at 79 branches. Another 110 non-branch jobs are also under threat in a proposed cull of managerial posts.

"Wherever possible we would look to offer existing vacancies to the employees who work in our in-store bakeries but anticipate that many will leave the business," Greggs said.

Ronnie Draper, general secretary of the Bakers Food & Allied Workers Union, said Greggs had never cut jobs on this scale before.

"It's come out of the blue. In the past the company has had profit warnings but we never expected this. It's devastating for the people who will be affected. We will look to save as many jobs as we can," Draper said.

Most of the branches affected are former Bakers Oven stores in south-east England. Greggs bought Bakers Oven in 1994 and rebranded all the branches with the company name in 2008. Once the changes are made, all branches will get their goods from Greggs's regional bakery network.

The company said it would work with trade union and employee representatives to "refine and develop the proposals".

Greggs said the cuts would save £6m a year from the middle of next year and £2m this year after costs of £9m for redundancy payments and write-offs on in-store baking equipment.

The company's sales fell in the first half of the year, prompting it to scrap an experiment with cafes and to revamp its traditional branches offering baked food on the go.

In the runup to Christmas staples such as sandwiches and pasties sold well and there was brisk business in "festive bakes" and mince pies, Greggs said.

Roger Whiteside, the chief executive, said: "I am encouraged by the improvement in trading that we achieved as we progressed through the year. As a result, full-year results should be in line with our previous expectations."

Profit growth will be limited over the next two years by costs involved in reviving the business, Greggs said.