Greggs Gatwick store interior
Sausage roll seller Greggs reiterated rather than raised profit guidance / Image source: Greggs
  • Like-for-like sales up 16% in H1
  • Full year guidance unchanged
  • Rate of cost inflation has started to ease

Value sausage rolls, pasties and pizzas seller Greggs (GRG) served up strong results for the half to 1 July 2023 as consumers continued to snap up its competitively-priced food and drink on-the-go.

Greggs also said the rate of food and packaging cost inflation has started to ease and this trend should continue through the second half to the benefit of margins.

However, shares in the coffees, steak bakes and goujons purveyor cheapened 5.5% to £26.10 as the lack of an upgrade to full year guidance triggered profit-taking by investors.


Like-for-like sales from company-managed shops grew an impressive 16% in the half, though second quarter growth moderated slightly from a first quarter boosted by weak prior year comparatives due to Omicron.

First half underlying pre-tax profit before exceptional items fattened up 14.2% to £63.7 million, ahead of Shore Capital’s £62.7 million forecast, and Greggs upped the interim dividend by 6.7% to 16p.

‘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,’ said Greggs.

‘As such, the board’s expectations for the full year outcome are unchanged.’

Accordingly, Shore Capital maintained its £163.2 million pre-tax profit estimate, implying 10.5% year-on-year growth.


CEO Roisin Currie stressed that with consumers remaining under pressure, Greggs continues to offer exceptional value, which is ‘reflected in our performance and growing market share. 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.’

While sceptical investors might be forgiven for thinking that the UK has already reached ‘peak Greggs’, the food-to-go operator remains very much in growth mode, deploying its strong cash flows to open new stores at pace while investing in supply chain capacity to support big growth ambitions.

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Greggs believes it can grow its estate to significantly more than 3,000 shops, up from 2,378 shops as of 1 July 2023.

Management’s confidence in this opportunity is ‘underpinned by recent success in catchments where Greggs is underrepresented such as retail parks, railway stations, airports, roadsides and supermarkets. We now have shops trading in Tesco (TSCO), Asda and Sainsbury’s (SBRY) supermarkets, with plans for further development.’


Quilter Cheviot analyst Mamta Valechha said this morning’s results ‘reiterate a positive outlook for Greggs, particularly given its unique growth opportunities, and its defensive position with a compelling value proposition showing positive signs, especially in this tough consumer landscape.’

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, warned Greggs ‘isn’t out of the woods just yet. Cost inflation may have eased but it remains unsavoury. Meanwhile, pressure on the UK consumer could build into the second half as the impact of higher interest rates starts to bite.’

However, Huggins pointed out Greggs is ‘in a far better position than most retailers and is more than holding its own. Should inflation continue to moderate, the business could really be in a sweet spot.’


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Issue Date: 01 Aug 2023