NORTH-EAST bakery chain Greggs was counting the cost of the bleak winter today as it warned that annual profits will be short of City hopes.

The Newcastle-based company, which has 1,681 shops, said the adverse weather in January and March was a big factor in a 4.4 per cent drop in like-for-like sales in the 17 weeks to Saturday.

Whilst trading in the past two weeks has shown an improved trend, it said profits were currently running short of last year and against its own hopes. 

The update triggered an 8 per cent fall in the company's share price as Greggs said profits for this year were now unlikely to meet the current range of City expectations of between £47.5m and £55.2m. 

The company warned: "We do not expect a significant improvement in the difficult underlying market conditions in the short term."

As well as the poor weather, Greggs has experienced lower footfall across much of its outlets. It has attempted to offset pressure on its high street locations by focusing new openings on workplaces, travel and leisure destinations. 

It has opened 18 new shops so far this year, including six franchised units with motorway services operator Moto. It has also completed 59 refurbishments in the period but closed eight shops.