- Third-quarter sales up 15%
- Cost inflation to remain at 9%
- Sticking with full-year guidance
Food-on-the-go chain Greggs (GRG) reassured the market with a robust trading update for the third quarter despite inflationary pressures and weak consumer sentiment.
The shares had fallen nearly 50% year-to-date before today as the company was caught up in a wider sell-off of consumer-facing names.
Greggs' market value is also down by double digits since Roisin Currie took over from her long-serving and well-regarded predecessor Roger Whiteside in May.
However, today's update and a reasonable first-half performance suggests that when it comes to the things she can control, Currie is off to a decent start.
The shares were up 9.7% to £18.90 as the Newcastle-headquartered outfit reported total sales up 15% for the 13 weeks to 1 October and stuck with its full-year guidance.
While sales in August dipped a little year-on-year thanks to less people staying in the UK for their holiday in 2022, September saw trends improve, notwithstanding the closure of stores to mark the death of Queen Elizabeth II which had a negative impact of 1% on like-for-like sales.
Notably Greggs kept its cost inflation outlook at 9% and looks set to continue its ambitious roll-out of new stores with, 150 net openings expected for 2022 as a whole.
The company says it has fixed a good chunk of its energy prices out to the first quarter of 2023 with average costs below the recently announced price cap.
SIGNS OF INNOVATION
There are also signs of new innovation in the business under Currie. These include an expanded vegan range and an automated pizza manufacturing line at its Enfield site to help support a growing category of sales for the group.
Deeming the update as 'very good' Shore Capital analyst Clive Black commented: ‘We are encouraged that it is trading to plan and pressing on albeit in general we worry about margins across the consumer around currency, energy, labour, and base rates. Greggs is a business with considerable ambition, aiming for around 3,000 UK outlets.
‘Lengthening the trading day is a key objective for Greggs as it seeks to build its revenues and further utilise its asset base. Whilst not sceptical as to its plans, we observe with interest to see how its assortment evolves to compete in the evening trade where there is a different meal occasion and also competitor set. Cracking this market would represent a major opportunity for Greggs that is for sure.’
