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UPDATE 1-UK baker Greggs expects sales recovery to lift annual profit

(Adds details from statement, background, shares)

June 28 (Reuters) - British bakery and fast-food chain Greggs said on Monday sales recovery was stronger than anticipated, adding that a sustained recovery from the COVID-19 pandemic could boost its annual profit.

Its shares rose 3% to 2,632 pence in early trading after the company said like-for-like sales in shops managed by Greggs were up between 1% and 3% in recent weeks compared to the same period in 2019.

“Since (the easing of restrictions on non-essential retail) we had expected to see increased competition as cafes and restaurants were allowed to compete more effectively with our largely take-out offer,” the company said in a statement.

However, Greggs warned that pent-up demand had reduced.

While the company’s shops have been able to stay open through the COVID-19 pandemic, the crisis has disrupted its business model which relies on a high volume of customer visits.

Last month, London-listed Greggs raised its profit outlook, despite like-for-like sales in the eight weeks to May 8 falling 3.9%. Previously, the company had said it did not expect profit to return to pre-pandemic levels until 2022 at least.

The company, best known for its sausage rolls, steak bakes and vegan snacks, is set to report its interim results on Aug. 3.

Reporting by Pushkala Aripaka in Bengaluru; Editing by Amy Caren Daniel

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