Its analyst Sahill Shan said: “The crucial aspect of next week’s finals [results] will be to what extent management can provide further confidence around the self-help strategy to resurrect like-for-like [performance].
While Shan predicted “a broadly positive tenor” in the final results, recent wet weather may have blunted like-for-like sales.
Greggs needed sales growth of about 2% to cover cost inflation and a 5% rise in like-for-like sales on growth capital expenditure to achieve a 20% return on investment, he said. “We anticipate broadly reassuring current trading commentary given the like-for-like comparative after 10 weeks last year was a weak -4%. Our caveat to this is to what extent the recent wet weather/flooding has proved a footfall drag. Our full year like-for-like assumption is +1.5%.”
Greggs’s sandwich proposition
The key focus in the first half of 2014 will be improving Greggs’s sandwich proposition, which accounts for about 30% of sales, said Shan.
While the the sandwich category was the most competitive, key improvements should help underpin like-for-like momentum. Shan predicted a keen emphasis on a hierarchical offering, price points and progress towards making half of the range a healthy option.
Other priorities included: achieving operational efficiencies in its dominant savoury category, which accounted for 35% of sales, re-launching its drinks range, including coffee, exploring other food-on-the-go categories and updating branding.
Last month Greggs warned that 410 jobs were at risk, after its decision to close in-store bakeries and simplify management and staff structures.
Greggs will release its final results for 2013 on Wednesday February 26.