The company’s managed shop like-for-like sales were up 2.8% for the 13 weeks to October 1. Its sales increased 5.6% for the year-to-date, and total like-for-like sales were up 3.4%.
Greggs’s summer menu – including its Balanced Choice healthier range of salads and yoghurts, helped boost sales 5.6% for the year-to-date. Like-for-like sales had also increased by 3.4%.
Expectations remain unchanged
The high-street baker said its expectations for the full year trading remain unchanged, as it reported its trading update this week (October 4). It announced its new distribution site in Enfield would be opened in the coming weeks, leading to the closure next month of its Twickenham distribution site.
Greggs third-quarter trading update – at a glance
- Total sales up 5.6%
- Company-managed shop like-for-like sales up 2.8%
- 145 refurbishments to date
- Total number of shops up 45 this year
A Greggs statement said: “Given trading to date and the outlook, our expectations for the full year outturn remain unchanged. As we look to next year, whilst we anticipate some general industry-wide cost pressures, we expect to make further progress against our strategic plan.”
The company was on track to complete around 200 refurbishments in 2016, it said, after it announced a total of 145 shop refurbishments by October 1. More than 100 new shops have been opened and 58 were closed – a total of 45 more shops since the beginning of this year.
‘On course for a good year’
Trading analyst XTB said Greggs’s sales helped it recover from the industry-wide decline from the Brexit vote. XTB analyst David Cheetham said: “A 5.6% increase in the 13 weeks to 1st October shows that Greggs remains on the right track and on course for a good year.
“The stock has performed well in the last 3 months with the summer menu and extended range helping the baker recover the majority of the Brexit-induced decline. The new autumn/winter menu is now in use as the company seeks to expand and differentiate its product offering away from just the traditional unhealthy bakes and include new snacks that are low calorie and gluten-free.”
Meanwhile, in its half-year update published in August, Greggs reported a 6% rise in sales to £433M.
What the analysts say about Greggs Q3 Update
- “A solid third-quarter update from Greggs this morning. This is not quite as robust as [its first half results] but still a good outturn. Net, the Q3 performance shows that the business continues to have good momentum. There is nothing fundamentally new in the rest of the update but we note management signal cost headwinds in [the 2017 fiscal year] which will temper any margin growth. Greggs has been an excellent recovery story over the last 3 years, but with upgrade momentum slowing and EPS growth in the 5-7% range the rating to our mind looks broadly correct.”
- “Greggs has been a very good investment in recent times, reflecting what we believe has been commendable work by Messrs. As such, the group has greater relevance today than it has had for some years and can, therefore, explore estate expansion with more confidence. Additionally, management is progressively thinking about the group’s supply chain and logistic base, taking quite fundamental actions over the rest of this decade to structurally adjust the operating cost base and capacity of the business. We see merit in all these moves, albeit we point out that the infrastructure work comes at a considerable capital cost.”
- Shore Capital
- “The firm continues to expand its retail outlets and attempt to streamline its business operations with 45 extra stores open year-to-date. The new autumn/winter menu is now in use as the company seeks to expand and differentiate its product offering away from just the traditional unhealthy bakes and include new snacks that are low calorie and gluten-free. Whilst the [company] states that the outlook for the rest of the year remains unchanged there is a warning of industry wide cost pressures as the expansionary monetary policy adopted by the Bank of England following the decision to leave the EU is seen by some to be conducive to food price inflation.”