Food-on-the-go outlet Greggs (GRG) received a negative response to what in the circumstances was a relatively robust trading update with the shares down 3% to £11.83.

The company said activity had picked in September following a slower August. Like-for-like sales in company-managed shops averaged 71.2% of the 2019 level in the 12 weeks to 26 September.

In the most recent four weeks to 26 September like-for-like sales averaged 76.1% of the 2019 level, in line with planning assumptions while delivery represented 2.6% of company-managed shop sales in the most recent week to 26 September.

Greggs also pledged to bring back more of its product range, including a broader sandwich range and Belgian buns.

The company said 100 of its larger shops had now reopened customer seating.  It would restart its shop opening programme and expected to open a net 20 shops in 2020.

Greggs said it had returned to a positive net cash position during September, though reiterated that the outlook remained uncertain, with ‘rising Covid-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home’.


This seems to be the key point, the recent improvement in trading may now be under threat thanks to the recently changed guidance to work from home if possible.

Shore Capital analysts Clive Black and Darren Shirley note: ‘Greggs has composed an upbeat narrative for its Q3 trading statement for what appears to be still a very challenged and uncertain trading environment, noting as we do additional lockdown measures taking place in its homeland North-East England market as we write.

They add: ‘There remains no guidance and we still refrain from issuing what could be, probably would be, meaningless forecasts.

‘What is clear though is that Greggs, through no fault of its own, has had its world turned upside down. 2020 is an earnings write-off and we believe it may not be until 2023 before the group can return to a) 2019 earnings levels and b) maybe even later still for prior medium-term pre-coronavirus forecasts to be reached, noting the material slowdown in store openings.’


Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 29 Sep 2020