Covid hit Greggs warns of job cuts as Card Factory and Hotel Chocolat post pre-tax losses

Greggs warned it could have to let go some some staff as the furlough scheme comes to an end by the end of October. Credit: PA

Some of the UK’s most recognisable high street chains have posted worrying pre-tax losses amid the coronavirus pandemic recovery.

Card Factory saw £22.2m statutory pre-tax loss in the first six months to July 31, while Hotel Chocolat reported a pre-tax loss of £7.5m for the year to 28 June, compared with a profit of £14.1m the year before.

ITV News Business and Economics Editor Joel Hills has more:

Greggs warned it could have to let go some some staff as the furlough scheme comes to an end by the end of October.

The Newcastle-based business said the "outlook for trading remains uncertain" as Covid infections rise again, bringing the treat of further restrictions.

The firm said it has completed a review of its trading operations as it sought to reflect the "estimated level of demand from November onwards”.

Greggs said its digital business is “developing quickly” after increased investment during the lockdown period, partnering with food delivery operator Just Eat.

In a statement, Greggs said: “The outlook for trading remains uncertain, with rising Covid-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home.

“In these challenging conditions our teams continue to work hard and have proven our ability to operate with social distancing and adapt to new digital channels.”

Sales melt away for chocolatiers

Sales were up 14% in the first half of the year for Hotel Chocolat but tumbled by 14% in the second half, which included the Easter period when sales tend to increase.

Chairman Andrew Gerrie said: "Having delivered a strong first-half performance, the second half of the year was materially disrupted by Covid-19 and the related restrictions, which led to the closing of all UK retail locations for 12 weeks, and the shutdown of our factory for eight weeks."

Hotel Chocolat has seen its digital sales increase by 150% this summer. Credit: PA

Recent data shows sales appear to have shifted online for the high street brand with digital demand up 150% this summer.

But the chain has closed five sites so far in key commuter locations due to a reduced number of passengers.

Card sales dip amid lockdown

Card Factory, which has more than 1,000 stores in both the UK and Ireland, saw its pre-tax profits dip.

Last year, the greetings card retailer made a £24.3m profit.

Like other firms, it saw strong online growth, with a 64.4% like-for-like revenue growth due to increased demand during the period where stores were closed.

The firm managed to reduce capital investment to £9.8m to help preserve cash during lockdown.

Card Factory executive chairman Paul Moody said: “We are pleased with both the trading performance as our stores have reopened and the positive feedback from customers who are visiting less frequently, but spending more.

“Recognising the uncertainty of the impact of further Covid-19 measures and changes in consumer behaviour in the short term, we are focused on a flawless execution of Christmas and the implementation of our refreshed strategy.”

More high street woes for employees

Tuesday's latest figures will only add to woes for those employed in the retail sector.

So far, there has been more than 130,000 jobs cut announced by major UK employers since the end of March, when lockdown was first introduced.

Retail has been one of the hardest hit sectors, with tens of thousands of jobs lost, along with aviation and hospitality.