UK bakery chain Greggs (GRG) continues to deliver the goods as Christmas treats, including mince pies and its festive bakes, helped like-for-like sales surge 5.2% in last quarter of 2018.
Greggs is confident underlying pre-tax profit will hit at least £88m, a slight uptick from previous guidance of approximately £86m, triggering a 7.7% rise in the shares to £14.72.
In November, profit forecasts were hiked as the bakery defied downbeat high street trading and benefited from strong sales growth.
Greggs was also able to keep selling during the summer heatwave when you would have thought that people may have been less likely to pick up hot goods.
UBS analyst Heidi Richardson believes the latest trading update success implies that Greggs is taking market share with growth driven by ‘a healthy mix of footfall and basket size growth’.
HEALTHY PRODUCTS PUSH PAYING OFF
Part of its success is the push for healthier products, including the popular yet controversial vegan-friendly sausage rolls, which whipped up a frenzied debate online.
The bakery is also keen to spread its wings, opening 149 new shops over the last year, growing its estate to 1,953 shops.
Another 90 to 100 openings are in the pipeline for 2019.
Canaccord Genuity analyst Nigel Parson has upgraded earnings per share forecasts by 4% to 68.7p in 2018 and by 3.3% to 73.5p this year based on an assumed 3% increase in sales.
With plenty of investment in the business over the last year or so, Parson argues Greggs will have the ability to boost its presence to approximately 2,500 shops.
