- Despite small dip this morning, shares still up more than 40% in six months
- Target to increase number of sites to 3,000
- Sales up 18.8% in first nine weeks of 2023
Mild profit taking doesn't detract significantly from a robust set of 2022 results from Greggs (GRG). Guidance for a strong 2023 and ambitious plans to increase its number of outlets across the UK to 3,000 reflecting management’s optimism on its future prospects in both the short and long-term.
In early trading the shares dipped 0.8% to £27.27 despite a big jump in sales so far this year, making only a small dent in the 40%-plus gains for the stock over the last six months.
The company flagged a continuing impact from inflationary pressures, costs were up 9% in 2022 and are expected to rise between 9% and 10% in 2023.
WHY PROFIT DIDN'T GROW NEARLY AS FAST AS SALES
The big increases in costs meant while sales were up 23% to £1.5 billion in 2022, pre-tax profit rose just 1.9% to £148 million. Greggs opened 147 new stores in the year and hopes to better that total in 2023 as it builds towards the 3,000 target from a current total of 2,328.
Like-for-like sales were up 18.8% in the first nine weeks of 2023, though this number was flattered somewhat by the comparison with a period at least partly blighted by the Omicron strain of Covid.
The company was sitting on net cash of £192 million at the start of the year and the final dividend of 44p was up 5% year-on-year.
Greggs was positive on later openings, with more than 500 of its stores open until at least 8pm and remains excited by the long-term potential for deliveries and click and collect sales which saw some normalisation coming out of the pandemic.
‘TRAVEL OF GREGGS BRAND HAS BEEN REMARKABLE’
Shore Capital analyst Darren Shirley commented on the big increase revenue for 2022: ‘Such high growth included double-digit inflation, but also some modest volume growth across the business, which we see as commendable.’
He added: ‘The group remains confident in prospects for 2023, and the medium-term opportunity to become a significantly larger multichannel business. Indeed, the travel of the Greggs brand has been remarkable, visiting its Leicester Square store, something unthinkable a decade ago, tells its own story.’
