* Store plans will create 6,000 jobs
* Capex of up to 300 million sterling in 5 years
* 16 weeks to Aug. 8 underlying sales up 0.2 percent
* On track to deliver targets for year
* Shares down almost 6 percent
(Adds detail, CEO, analyst comments, shares)
By James Davey
LONDON, Oct 20 (Reuters) - British baker Greggs detailed plans to open 600 more stores, create 6,000 jobs, and upgrade its supply chain at a cost of up to 300 million pounds ($492.8 million), as it posted a rise in third-quarter sales.
The Newcastle-based firm, which sells sausage rolls, cakes and bread to over six million customers a week from about 1,400 outlets, said it intended to open a net 50-60 new shops in 2010 and from 2011 onwards at least a net 70 a year. It will also double the rate of shop refits to 120 a year from 2010.
"Currently more than 50 percent of the UK population do not have a Greggs near by," Ken McMeikan, chief executive since August 2008, told reporters.
"It remains our belief that a further 600 plus shops can be opened in the medium term with little cannibalisation of sales from existing shops," he said.
Greggs will target under-represented areas, such as Southern England and the East Midlands, and open more stores in non-traditional locations such as industrial and retail parks, airports and bus stations.
To support this store growth the firm plans to renew and extend existing regional bakeries, replace two, and build a new one in the South of England.
The firm's plans will require capital expenditure to rise to 50-60 million pounds over three to five years, financed from cash generation.
It said development of the supply chain will eventually deliver annual savings of at least 10 million pounds a year.
Many UK retailers have struggled during the recession but Greggs, with its relatively low transaction value, has done better than most and its shares have risen by nearly a half over the last year.
But the stock was down nearly 6 percent at 437.6 pence at 0937 GMT, valuing the business at 449 million pounds, as investors, concerned at the extent of Greggs' capital outlay, booked profits.
David Stoddart, analyst at Altium Securities, downgraded his recommendation to sell from hold.
"The benefits of the supply chain overhaul have been enumerated but not the revenue costs of getting there," he said.
News of Greggs' expansion plans came as it said sales at stores open at least a year increased 0.2 percent in the 16 weeks to Oct. 17 -- in line with the firm's expectations of "marginally positive" like-for-like sales growth in 2009.
That compares with flat growth in the six weeks to Aug. 8 and first half growth of 1.5 percent.
Total sales up 2.5 percent over the 16 weeks, were boosted by a 20 percent rise in sales of baguettes and a 12 percent increase in sales of steak bakes.
McMeikan said selling price inflation was falling and was running at its lowest level for five years, while overall cost inflation was easing.
He forecast the first ever national range of Halloween products, including Bat Biscuits and Creepy Cup Cakes, would deliver a doubling of sales compared to Halloween in 2008.
"We are on track to deliver our targets for the year although the final outcome will depend on consumer sentiment and spending over the important Christmas period," he added. ($1=.6088 Pound) (Editing by Kate Holton and Jon Loades-Carter)