- On track to open between 140 and 160 net new shops
- Full year outcome unchanged from previous guidance
- Company-managed shop like-for-like sales up 5%
Shares in Greggs (GRG) were down more than 3% to £30.07 as investors expressed mild dissatisfaction with the UK bakery chain’s third-quarter trading update.
Reporting a 10.6% rise in total sales for the 13 weeks to 28 September, and 12.7% year-to-date, the company expects its full year outcome to be in line with previous expectations, acknowledging ongoing economic uncertainty.
Like-for-like sales growth slowed to 5% in the 13 weeks to 28 September, with 6.5% growth on this metric in the year-to-date.
The FTSE 250 firm expects the overall level of cost of inflation for 2024 to be towards the lower end of the 4-5% range as previously stated.
NEW SHOP OPENINGS
On the upside, the food-to-go specialist has opened 152 new shops, including two Drive-Thrus in Bristol, at Abbeywood Retail Park and Harlequin Business Park.
For the year as a whole Greggs expects 140 to 160 net shop openings, including around 50 relocations and 55 net openings with franchise partners.
The UK bakery chain also said it continues to innovate with new products for customers including an All-Day Breakfast Baguette, Mexican Bean & Spicy Cheese Flatbread, Pumpkin Spice Doughnut, and a seasonal drinks range including the Pumpkin Spice Latte and Salted Caramel Latte.
A GROWTH STORY
Russ Mould, investment director at AJ Bell. ‘While like-for-like growth of 5% is nothing to sniff at against a tricky backdrop it does represent a material deceleration for Greggs. When you add in the shares’ strong run over recent times, it is not entirely surprising to see a bit of market disquiet.
‘The company is not resting on its laurels. It continues to innovate in terms of its product range, and it is also pressing ahead with its ambitious store roll-out programme. The nagging question for investors is when does Greggs hit saturation point?
‘Greggs’ heavy investment in infrastructure to support further outlets suggests it sees continuing scope for growth for some time to come, and an excellent track record going back decades means it is likely to be afforded some trust by shareholders.
‘However, achieving the scale of expansion which Greggs has outlined will not be easy and there could be some speed bumps along the way.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell.
