Greggs PLC on Tuesday reported a half-year earnings climb and said it has made a promising start to the second half of 2023, amid signs inflation is easing.

Greggs shares fell 7.2% to 2,562.00 pence each, however, among the worst FTSE 250 performers.

The baker said total sales in the six months to July 1 rose 22% to £844.0 million from £694.5 million a year earlier. Pretax profit was 43% higher at £80.0 million from £55.8 million. Its bottom line got a £16.3 million boost from the settlement of a Covid-19 business interruption insurance claim.

‘Greggs strong performance continued in the first half of 2023 as we deliver on our strategic growth plan. With consumers remaining under pressure, we continue to offer exceptional value, which is reflected in our performance and growing market share,’ Chief Executive Roisin Currie said.

‘In the period we continued to open further new shops, extended trading hours into the evening and saw increased participation in the Greggs App. Our ambitious plans for growth are on track and our amazing teams are committed to realising the opportunity to become a significantly larger, multi-channel business.’

Greggs declared a 16.0p per share interim dividend, up 6.7% from 15.0p.

Like-for-like sales in company-managed shops improved 16% on-year. Like-for-like growth moderated as 2023 has progressed, initially surging 19% in the first nine weeks of the year, and 17% in the first 19 weeks. Greggs said the Omicron-hit start of 2022 ‘flattered’ like-for-like comparisons at the start of this year.

Greggs added: ‘In the first half of 2023 we opened 94 new shops (including 33 franchised units) and closed 44 shops, giving a total of 2,378 shops (of which 466 are franchised) trading as at 1 July 2023. We have increased the pace of both openings and closures as we expand the reach of our shops into new locations and relocate existing shops to larger sites in better locations to facilitate further growth. The phasing of shop closures was unusual in its weighting towards the first half of the year. However, we have a strong new shop pipeline and we remain confident that we will open around 150 net new shops in the year as a whole.’

It has also continued to progress with its plans to up sales in the evening.

‘This remains a significant opportunity for Greggs as it is the largest segment of the food-to-go market by value, yet the one where Greggs currently has the lowest level of penetration. In the first half of 2023, post-4pm sales grew more strongly than any other daypart, and represented 8.3% of company-managed shop sales, up from 6.5% in the first half of 2022. The extension of trading hours supported evening growth and we also saw increased levels of trade post-4pm in existing opening hours as customers recognise the convenience and value of our offer later in the day,’ the company added.

Greggs said its ‘strong trading momentum’ in the first half has continued in the second. It said the rate of cost inflation ‘has started to ease and we expect this trend to continue through the second half’.

‘Whilst uncertainties in the economic outlook remain, we continue to trade in line with our plan and are making good progress against our strategic objective to grow the frequency of customer visits through new channels. As such, the board’s expectations for the full year outcome are unchanged,’ the company said.

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