Sweet mince pies
Greggs’ like-for-like sales remained robust over Christmas despite demanding prior year comparatives / Image source: Greggs
  • Fourth-quarter like-for-likes up 9.4%
  • Full-year profit guidance maintained
  • Better-than-expected cash in coffers

Tyneside baker Greggs (GRG) topped the FTSE 250 leader board, with shares in the food-on-the-go retailer rising 7% to £26.46 following a tasty fourth-quarter trading update which showed like-for-like sales remained strong despite demanding prior-year comparatives.

The value-for-money sausage roll, coffee and pizza slice purveyor’s full year revenues came in slightly ahead of expectations and Greggs said it expected a more stable cost base as inflationary pressures ease.

The company also kept investors sweet with a massive beat to cash generation expectations, as year-end net cash of £195 million came in comfortably ahead of the £130 million Liberum Capital was looking for, supporting investment in growing the shop estate and expanding supply chain capacity with management expecting a further 140 to 160 stores to open this year.


The steak-bake king served up like-for-like growth of 9.4% in the fourth quarter ended 30 December supported by continued growth in transaction numbers, although growth did slow sequentially due to a reduced contribution from price inflation.

Seasonal lines including Greggs’ iconic Festive Bake, Chocolate Orange Muffin and Christmas Lunch Baguette were in high demand in the quarter as hungry shoppers on a budget wolfed down its on-the-go offering.

Moreover, the popular brand has become more accessible through digital channels and extended trading hours. By the end of 2023, Greggs was available for delivery on the Uber Eats platform in 710 of its stores, well ahead of management’s original target of 500 shops by October, in addition to the service provided by existing partner Just Eat, part of Just Eat Takeaway (JET).

Total sales for 2023 were almost 20% higher at a better-than-expected £1.81 billion, with like-for-like sales fattening up 13.7%. Given the strength of trading in the final quarter, Greggs maintained its full year 2023 guidance and said it was confident of serving up ‘another year of good progress in 2024 as we continue our plans for sustainable growth’.

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AJ Bell investment director Russ Mould said that extended opening hours, product innovation, a more efficient supply chain and improved delivery options have all been ‘material factors in Greggs’ ability to keep serving up an impressive performance. Even the slight negative in the update contains a grain of positivity for customers, with the lower sales growth in the final three months of the year largely driven by the company putting the brake on price increases thanks to easing inflationary pressures.’

Mould said: ‘Given value is a key component of the Greggs proposition, this ability to keep a lid on its prices is really important and points to an encouraging outlook for 2024. It is also underpinning the decision to open 160 new sites through the course of the year.

‘Greggs is a well-run business with a keen sense of what its customers want and clear levers it can pull to augment growth. As such, it is little wonder investors have marked the shares higher today.’

Begbies Traynor’s (BEG:AIM) Julie Palmer said Greggs is still ‘clearly on a roll after total sales leapt nearly 20% in 2023 as it continues to demonstrate the enduring appeal of its low-cost offer and the successful execution of its expansion plans.

‘In 2023, Greggs expanded its empire significantly through 220 new openings and with nearly £200 million on the balance sheet, it’s got the fire power to continue to innovate and expand in 2024.’

Palmer continued: ‘In the current climate, even beloved brands like Greggs must fight to remain relevant so investors will also be pleased to see the strong organic growth thanks to the success of its partnerships with Just Eat and Uber Eats, as well as the introduction of longer trading hours.

‘This year, Greggs’ winning ingredients of low prices, an iconic brand and frequent innovation should ensure it remains on the menu for millions of customers who are still feeling the pain during this ongoing cost-of-living crisis.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.


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Issue Date: 10 Jan 2024