Greggs ‘on front foot’ as strategy pays off

By Rod Addy

- Last updated on GMT

One of Greggs’s new-look stores
One of Greggs’s new-look stores

Related tags Like-for-like sales Retailing Greggs

Greggs’s strategy is paying off, according to Sahill Shan, analyst at N+1 Singer, as the food-to-go chain disclosed strong half-year (H1) figures, ahead of interim results next month.

“In today’s H1 pre-close there is good news on like-for-likes, overall cost control and input cost inflation for H2 … we feel Greggs is generally on the front foot,”​ he said.

The positive progress had been driven by shop refurbishments, longer opening hours, improved product ranges, better weather and the improving economy, he added. Greggs’ management attributed about 1% of like-for-like sales growth to the refurbishments.

Greggs reported refurbishing 131 shops across the half-year, leaving the group well on-track to hit its full-year target of 200 refurbs. A total of 26 new shops had opened over the period and 36 closed, it added.

Trial of sandwich sales

In addition to the new-look store roll-out, the firm’s planned trial of new sandwich sales in Birmingham had gone well in its second financial quarter, he said. The updated range was launched nationally last Tuesday.

Shan welcomed news from Greggs’s management that it anticipated business costs would decrease, relieving the need to increase product prices on shelves.

Mark Hodges, analyst at Edison Investment Research, called the retailer’s announcement “an encouraging interim statement”​.

Like-for-like sales up

In its H1 results for the 26 weeks to June 28, Greggs reported like-for-like sales up 3.2%. The company said it expected to report operating profits of £16M–£17M in its interim results, due for publication on July 30, against £11.5M for the same period in 2013.

The positive progress follows the retailer’s January announcement that the continued overhaul of its stores, entailing the closure of all instore bakeries and a management restructure, could lead to 410 job cuts​.

In preliminary results for the 52 weeks to December 28, 2013, issued in February, Greggs reported like-for-like sales down 0.8%, showing promise in comparison with weaker previous results.

Greggs currently has 1,700 retail outlets across the UK.

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