4 October 2022

GREGGS PLC

Q3 TRADING UPDATE

Greggs is a leading UK food-on-the-go retailer,

with more than 2,200 retail outlets throughout the country

Trading in line and full year expectations unchanged

Q3 highlights

·    Total sales up 14.6% for the 13 weeks to 1 October 2022

·    Company-managed shop like-for-like* sales up 9.7% for the 13 weeks to 1 October 2022

·    90 net new shops opened year-to-date (106 openings less 16 closures)

·    Continue to expect around 150 net shop openings in 2022

·    New autumn menu introduces more vegan-friendly and hot food options

·    New pizza production capacity successfully commissioned

·    No change in cost inflation outlook for the year

·    Full year outcome expected to be in line with our previous expectations

* Like-for-like (LFL) company-managed shop sales performance against comparable period in 2021

Trading performance

Greggs continued to trade well over the third quarter of 2022 with total sales up 14.6% and like-for-like sales in company-managed shops rising by 9.7% when compared with the same period in 2021.  As expected, year-on-year growth moderated in August given the particularly strong 'staycation' effect seen in 2021, however, momentum returned in September.  We closed our shops on 19 September for the funeral of Her Majesty The Queen and this impacted reported LFL sales growth for the third quarter by around one percentage point.

Our autumn menu is now available, featuring favourites such as the pumpkin spice latte and our chicken & stuffing baguette.  Our hot sandwich meal deal, which includes southern-fried potato wedges and any hot or cold drink, is now available in over 1,000 shops.  Our great-value pizza deal continues to be popular all day, particularly in the growing evening daypart. The broadening of our vegan-friendly food options has also been well received, and latest additions to the menu include our 'vegan bean & cheeze toastie' and the 'vegan southern fried chicken-free baguette'.

Shop estate and supply chain development

In the year to date we have opened 106 new shops and closed 16 shops, giving a total of 2,271 shops trading at 1 October 2022 (comprising 1,860 company-managed shops and 411 franchised units). Openings in the third quarter included two 'drive thru' sites in Amesbury and Durham and railway locations at Tottenham Hale and London's Liverpool Street Station.  For the year as a whole, we continue to expect around 150 net openings, of which around 40% are planned to be with franchise partners.

In September we commissioned a new automated pizza manufacturing line at our Enfield site.  Product quality is excellent and will support further growth in this important category as well as lowering production costs.

Supported by our strong balance sheet, we continue to work on options for development of further capacity to support our significant growth ambitions.  Some of the planned 2022 costs associated with this work are now likely to move into 2023 and, as such, we now expect capital expenditure in 2022 to be around £120 million (previously expected to be £170 million) with the difference being deferred to 2023.

Board changes

As previously announced, Matt Davies, currently Chair Designate, will succeed Ian Durant as Chair of the Board of Greggs on 1 November 2022, when Ian steps down from the Board.  Ian has led the Board through a transformational period for Greggs and, alongside the improved performance of the business, has championed significant improvements in diversity and gender balance at senior levels.

Outlook

The outlook for cost inflation for the year remains consistent with our previous guidance of c.9% overall like-for-like cost inflation in 2022 and we now hold an appropriate level of forward purchasing cover in respect of our fourth quarter requirements for key food and energy commodities.  We also hold significant energy cover for the first quarter of 2023, with average costs expected to be below the level of the recently-announced price cap.

Greggs continues to trade well in an environment where cost pressures are significant and our outstanding value-for-money positioning is ever-more important to consumers. There remains considerable uncertainty in the economy as a whole but we continue to trade in line with our plan and currently expect the full year outcome to be in line with our previous expectations.