Bakery food-on-the-go retailer Greggs (GRG) tasty run continues, the shares fattening up another 28p (2.24%) to £12.78 on a nourishing third quarter trading update.
Like-for-like sales rose by 5% in the 13 weeks to 30 September, and while the value sausage rolls-to-coffees seller Greggs reminds investors that food ingredient cost pressures are a headwind, it reckons the rate of increase will moderate towards the end of the year and full year profit expectations are unchanged.
GROWTH INGREDIENTS
This is an encouraging update from Greggs, a recent Great Ideas selection now 8.6% in the money off the back of today’s positive update.
Albeit an established operator with a network of more than 1,800 branded UK food-on-the-go outlets, Greggs is on course for a net increase of ‘around 100’ shops this year. It has scope to expand its estate well beyond 2,000 UK stores in the medium term.
As outlined in August, Shares believes Greggs can expand its estate significantly, while self-help measures should help sustain its run of strong like-for-like sales momentum.
Encouragingly, total sales for the third quarter rose 8.6%, boosted by Greggs’ ongoing store roll out and nourishing like-for-like growth in company-managed shops.
LIKING THOSE LIKE-FOR-LIKES
Under CEO Roger Whiteside (pictured below) and since the fourth quarter of 2013, Greggs has generated 2%-plus like-for-like sales growth in every quarter, driven by its transformation from traditional baker into a food-on-the-go business.
Year-to-date, Greggs’ like-for-like sales are up an encouraging 3.9% and Whiteside’s charge continues to invest to ensure its menu doesn’t become stale.
Breakfast meal deals and savoury favourites provide the earnings ballast, although Greggs now offers a range of healthier products spanning sandwiches, salads, bakes and soups and has widened its sugar-free drinks range to tap into changing consumer preferences.
2017’s final quarter should receive a boost from an autumn/winter menu including a new 'all day breakfast' wrap and a Thai Chicken Soup added to the retailer’s Balanced Choice range.
Says Greggs: ‘The investment in our new forecasting and replenishment system is resulting in greater product availability for customers; in addition the seasonal changes to our range have been popular and we have further developed our Balanced Choice options. Sales at breakfast time continue to grow strongly along with participation in our great value deals.'
