Bakery chain Greggs today said its expansion plans failed to distract the business last year after annual profits rose 8% to £48.8 million.

The performance, which included a 4.8% rise in sales to £658 million, came as Greggs prepared the ground for a faster programme of store openings.

The group has 1,400 retail outlets but intends to add between 50 and 60 shops to its estate this year, followed by at least 70 a year from 2011 onwards.

As well as expanding in areas such as the South West, North East Scotland and North Wales, the drive will bring more shops in locations where customers work and travel, such as transport hubs and industrial and retail parks.

In order to carry out the growth, Greggs has completed a major programme of reorganisation, including the overhaul of its supply chain and the harmonisation of 80% of its product range.

It has created a single brand by converting 60% of its 164 Bakers Oven shops to the Greggs fascia and launched a marketing campaign promoting Greggs as “the home of fresh baking”.

Chief executive Ken McMeikan said: “The changes of the last year have put us in a strong position to deliver the significant growth opportunities that we have identified.”

With Greggs braced for more challenging trading conditions, it said like-for-like sales were likely to be “marginally positive” this year, in line with the 0.8% increase achieved in the ten weeks to March 13.

The outlook for ingredient costs is reasonably benign, Greggs added.

The company also announced its 25th consecutive year of dividend growth since it floated on the stock market in 1984. The total payout for the year to January 2 will be 16.6p, an increase of 11.4% on a year earlier.

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