Greggs’s sales rise after ‘supply chain investment’

03-Oct-2017 - Last updated on 03-Oct-2017 at 13:17 GMT

High street baker Greggs reported total sales up by 8.6% in third-quarter results to September 30, attributing the rise partly to supply chain improvements.

Total sales rose by 7.8% in the year-to-date, while like-for-like sales have increased by 3.9%.

Representing Greggs’s 16th consecutive quarter of rising sales, like-for-like sales in company-managed shops climbed by 5%, compared with 2.8% in the same period of last year.

“The investment in our new forecasting and replenishment system is resulting in greater product availability for customers …,” according to the company’s third-quarter statement.

Also the redevelopment of Greggs’s Leeds bakery to consolidate the manufacture of small cakes and muffins, was progressing well. The business plans to trial its new SAP supply chain system in two sites ahead of broader deployment next year.

New SAP supply chain system

Other factors boosting sales were the popularity of seasonal range changes and the development of the firm’s Balanced Choice options, it claimed. Sales of breakfast products were said to also grown strongly.

Fourth quarter sales were expected to benefit from the baker’s autumn/winter menu, including a new all-day-breakfast wrap and the addition of Thai Chicken Soup to its Balanced Choice range.

Greggs’s financial forecast for the full year remain unchanged despite rising ingredients prices. “As we have previously indicated, food ingredient cost pressures are a headwind, although we continue to expect that the rate of increase will begin to ease towards the end of the year. Accordingly, our expectations for the full year outturn remain unchanged,” it said in a statement.

‘Food ingredient cost pressures’

So far this year, Greggs has opened 98 new shops, including 37 franchised units mainly in transport locations. The business has closed 32 shops, resulting in its retail estate totalling 1,830 shops at the end of September.

The total comprises Greggs’s own shops totalling 1,636 and 194 franchised units.

During the remainder of the year, the business planned to open 140–150 shops and close a further 40–50, amounting to a net increase of about 100.

Commenting on first-half results in August, Greggs chief executive Roger Whiteside said: “The business has traded in line with our plans during the first half of the year.

“We have made good progress with our strategic plans and remain confident of futureprospects although we remain alert to short-term pressures on consumers’ disposable income.”