Greggs serves up solid growth as menu focus continues

Bakery chain Greggs reported solid third quarter growth on Tuesday, claiming total sales were up 8.6% in the 13 weeks to 30 September, compared to 5.6% growth at the same time last year, while like-for-like sales in company-managed shops improved 5.0%, up from 2.8%.

The FTSE 250 company said total sales had grown 7.8% in the year-to-date and like-for-like sales increased 3.9%.

It said the investment in its new forecasting and replenishment system was resulting in greater product availability for customers, and in addition the seasonal changes to its range had been “popular”, with the company further developing its ‘Balanced Choice’ options.

Sales at breakfast time also continued to grow “strongly”, the board claimed, along with participation in its value deals.

“In the year-to-date we have opened 98 new shops, including 37 franchised units predominantly in transport locations,” the Greggs board said.

“We have closed 32 shops, giving a total of 1,830 shops trading at 30 September - comprising 1,636 of our own shops and 194 franchised units.

“For the year as a whole we still expect to open 140-150 shops and close 40-50, a net increase of around 100.”

Greggs also completed 120 shop refurbishments in the year-to-date, and said it remained on track to refurbish around 130 shops by year-end.

Looking ahead as the company descended into the final quarter of the year, it had now launched its autumn/winter menu including a new 'all day breakfast' wrap and added Thai Chicken Soup to its ‘Balanced Choice’ range.

Work on its supply chain investment plan was also progressing, Greggs said, with the focus on redeveloping its Leeds bakery to consolidate manufacturing of small cakes and muffins.

Alongside that, the board said it would trial its new SAP supply chain system in two sites ahead of broader deployment next year.

“Our investment in greater product availability and service has benefitted recent trading.

“As we have previously indicated, food ingredient cost pressures are a headwind, although we continue to expect that the rate of increase will begin to ease towards the end of the year.

“Accordingly, our expectations for the full year outturn remain unchanged.”