Greggs ends ‘excellent year’ on a high
The food-to-go retailer boosted total sales by 5.2% and own-shop like-for-like (LFL) sales by 4.7% in the year to January 2 2016, according to a trading update issued today (January 12).
Greggs highlighted the success of its hot food menu, seasonal treats such as mince pies and its Balanced Choice range, which features salads and ‘no added sugar’ drinks.
Chief executive Roger Whiteside welcomed the good finish to the year and said the retailer anticipated that its full-year results would be in line with previous expectations.
‘Another excellent year of progress’
“2015 saw us deliver another excellent year of progress as we continue to transform Greggs into a modern, well-invested food-on-the-go retailer,” Whiteside said.
Results at a glance
- Total sales up 5.2% in 2015
- Own-shop LFL sales up 4.7% in 2015
- 2.3% LFL sales growth in Q4
“In the year ahead we will continue with the implementation of our strategic plan to enable the business to compete more effectively in the food-on-the-go market.”
The retailer planned to add flat white coffee and an improved mocha to its menu early this year to capitalise on the strong growth of coffee sales.
The demand for breakfast-on-the-go has made the morning “the fastest growing part of the day”, according to the trading update published today.
Dip in footfall in some shopping areas
Like-for-like sales growth slowed to 2.3% in the fourth quarter (Q4) as the retailer came up against stronger comparatives and a dip in footfall in some shopping areas.
N+1 Singer analyst Sahill Shan said Greggs had managed to navigate a challenging few months for the high street and welcomed the “positive closing to a hugely successful year”.
“We have a high conviction that positive consumer backdrop and much improved retail/product proposition will allow Greggs to be a winner in the growing food-to-go sector,” he said.
The baker completed 202 refits and 20 conversions of large bakery cafes in 2015. During the year 122 shops opened and 74 others closed, bringing the total number of shops to nearly 1,700.
Preliminary full-year results are due to be announced on March 1 2016.
View from Conlumino
The key to Greggs’ recent success has been its strategic focus on the food-to-go market, which has seen it move beyond its roots as a pasty purveyor. It now appeals to a lucrative market of workers, consumers on the move, and those at its traditional high street locations.
Greggs notes that its new Balanced Choice salads, hot food options and ‘no added sugar’ drinks are proving popular, while breakfast-on-the-go is now its fastest growing part of the day, with sales of its improved coffee, available as part of its popular meal deals, growing strongly.
In a sign of the times, Greggs is tapping into the ‘flat white economy’, launching the trendy coffee variety alongside an improved mocha in the New Year.
- Greg Bromley, consultant, Conlumino
View from Shore Capital
We view the Q4 trading performance as robust, with Greggs delivering LFL growth of 2.3% despite toughening comparatives and a challenging trading environment with management highlighting ‘weaker footfall in some shopping locations’ through November and December citing a combination of very wet weather, the Paris terrorist attacks and the ongoing trend to on-line.
- Clive Black and Darren Shirley, analysts, Shore Capital
