New stores drive up Greggs’ sales by 6%
Like-for-like sales rose by 1.4% during the year. This included a 0.4% increase in the first half, 0.8% in third quarter and 3.8% in the final quarter. The boost in the final quarter reflected better weather in November and December compared with the previous year.
But the Royal Wedding public holiday last year reduced profits by about £1M, it said. This was caused by reduced trading hours and additional operational costs.
The firm said it had responded to reduced high street footfall coupled with consumers’ search for value by increasing promotional investment in its Meal Deals category.
Also, a strong performance in savouries – which have a lower selling price than sandwiches – reflected consumers’ focus on value.
New product launches
New product launches were 25% up last year at 180 lines, with Superstar Doughnuts accounting for sales of 4.8M.
Major investments last year included the commissioning of new bakeries in Newcastle and Penrith.
The £16.5M Gosforth Park bakery in Newcastle replaced an older bakery in the city.
The £4.5M specialist confectionery bakery in Penrith is supplying shops throughout the UK.
During 2012 Greggs said it planned to open another 90 shops and develop new channels to market.
City analysts Darren Shirley and Clive Black of Shore Capital said they were encouraged by the range of new stores. “The breadth of store openings gives us encouragement that the medium term target of 2,000 outlets is very achievable, and may indeed prove a modest target in the long term,” they said.
New channels will include: expansion in the take-home food market together with the sale of four-pack frozen sausage rolls in all Iceland’s 750 stores nationwide.
Greggs' chairman Derek Netherton said: “While we expect 2012 to be another year of significant challenge for UK consumers, we believe we are well placed to deliver further progress.”
Shirley and Black concluded: “While current trading is below our initial FY2012 forecasts, we are retaining our 2012 forecast post today’s [March 14] update. Our forecasts assume total sales growth of 5.0% (5.5% previously), with a flat like-for-like sales contribution and an EBIT [earnings before interest and taxes] margin of 7.6% (previously 7.5%).”
