Greggs lifts expectations after strong festive period

Greggs said it had a “strong” finish to the year in its fourth quarter trading update on Wednesday, reporting total sales growth of 7.2%, with company-managed shop like-for-like sales growing by 2.9%.

The FTSE 250 retail bakery chain said that in its fourth quarter, company-managed shop like-for-like sales grew 5.2%, which the board said built on the “strong” trading performance that it reported in its November trading update.

It said that while seasonal products such as its ‘Festive Bake’ and freshly-baked mince pies sold well, the firm also saw further progress in growth categories such as hot drinks and breakfast.

Operational delivery was also described as “strong”, benefiting from investments that the company had made in systems and in staff training.

As it entered the new year, Greggs said it was continuing to refresh its range to keep step with changing consumer tastes.

The launch of its vegan-friendly sausage roll had proved “very popular” with a broad range of customers, Greggs claimed, and could now be combined with its vegan-friendly winter vegetable soup in a meal deal.

During the year the company opened 149 new shops, including 62 franchised units, and closed 50, growing the estate to 1,953 shops trading as at 29 December - 262 of which were franchised shops operated by partners in travel and other convenience locations.

In the year ahead, Greggs said it expected net shop openings to be in the range of 90 to 100.

Looking ahead, in 2019 the board said it would continue to execute the supply chain change programme that was supporting its “ambitious” growth plans.

It explained that while there were many economic and other uncertainties hanging over the consumer environment, Greggs had entered the new year with “good” sales momentum and operational execution, a “strong” offer and a “robust” financial position.

The board said it now expected that it would deliver underlying profit before tax of at least £88m, slightly ahead of its previous guidance, when it reports its preliminary results for 2018 on 7 March.

“We delivered a very strong finish to 2018 despite the well-publicised challenges in the consumer sector,” said Greggs chief executive Roger Whiteside.

“This performance was broad-based, reflecting the strength of our range of freshly-prepared food and drinks, and the strategic changes that we have made in recent years to focus more effectively on the food-on-the-go market.”

Whiteside said that in the year ahead, Greggs would continue to innovate with products designed to reflect changing consumer tastes, and by opening in new locations that made the brand more accessible to customers.

“The investments that we are making in our supply chain will allow us to deliver the outstanding value and quality that Greggs is famous for across a growing shop estate.”