Greggs’s full-year profits ‘ahead of expectations’

By Michael Stones contact

- Last updated on GMT

Greggs had chalked up 'a fabulous year', said Shore Capital
Greggs had chalked up 'a fabulous year', said Shore Capital

Related tags: Retailing, Greggs

High-street baker Greggs predicted full-year profits will be ahead of analysts’ expectations, after posting own shop like-for-like (LFL) sales up by 5.2% for the 24 weeks to December 13.

Over the year-to-date, the baker’s own shop like-for-like sales rose by 4.2% compared with a fall of 1.1% in the same period of last year. Total sales climbed by 3.6% in the year to December 13.

Greggs’s boss Roger Whiteside remained bullish about the firm’s full-year trading prospects. “While there is still much to play for over the final few weeks of the year we currently anticipate that full year profits will be ahead of analysts' expectations,” ​said the chief executive.

‘A huge endorsement’

City analyst N+1 Singer was upbeat about the results. Its analyst Sahill Shan said: “The strong showing is a huge endorsement of the retail/product focused strategy under the new ceo, as it demonstrates the business has genuine footfall momentum, given that for the first time in 12 months it was lapping tougher quarterly comparatives.”

The growth in like-for-like sales will continue into the 2015 financial year and deliver earnings per share growth of between 3–8%, said Shan.

“After a period in the doldrums and then the last 18 months of trying to win over the sceptics, today’s​ [Monday December 15] is another positive step.”

‘A fabulous year’

Analyst Shore Capital described 2014 as “a fabulous year” ​for Greggs. “The stars are reasonably aligned for Greggs in 2014 …”​ said analysts Clive Black and Darren Shirley. “Management makes mention of less disruptive weather conditions for its product categories on the high street, which has been beneficial for trading.

“However, we believe that credit is also due for Roger Whiteside and his team for the simple but effective improvements that have been brought to the business in product, packaging, merchandising and stores; including seating over the last year or so.”

The baker was benefitting from lower input costs – ​ initially in flour, cream and pork and more latterly from oil. “The latter will be helping distribution costs at the margins with the promise of potentially lower bakery costs in the New Year if energy prices continue to contract.”

Shore Capital repeated its ‘buy’ advice on Greggs’s stock.

Meanwhile, in September Greggs impressed City analysts​ with 5.4% growth in like-for-like sales over the previous 11 weeks.

Greggs operates nearly 1,700 retail outlets throughout the country.

The firm will post an update on Christmas trading in early January.

 

Greggs trading update – at a glance

  • Own shop like-for-like sales up 5.2% for the 24 weeks to December 13
  • Year-to-date own shop like-for-like sales up 4.2%
  • Total sales growth 3.6% year-to-date
  • Expect full-year profits for the 53 weeks to January 3 2015 to be ahead of analysts’ expectations

Related topics: Bakery, Cereals and bakery preparations

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