Greggs is a 2014 star, as supermarkets struggle
In addition, the high street retailer achieved an outstanding performance for Christmas sales, in contrast to the overall lacklustre performance from traditional supermarkets, according to Shore Capital analyst Darren Shirley.
Management had attributed the growth to the amount of people coming through the doors, with like-for-like sales growth driven by increased transactions rather than the amount they had bought, said Shirley.
“However, we believe Greggs’s performance has undoubtedly benefited from the greater self-confidence across the business, which is evident in the stronger flow of new product development, innovation and ‘deal’ activity,” he added.
In view of the firm’s performance, he predicted it would continue with its store opening programme in 2015, opening a balance of about 35 shops, including those run by franchisees.
Upgraded profit forecast
Shore Capital upgraded its forecast for the business’s pre-tax profit for the current full-year, to be revealed in preliminary results in March, to £58.1M on the basis of its progress.
It claimed high single digit sales growth from older shops being converted to its new food-to-go format.
The company reported growth in sales of sandwiches, sausage rolls and coffee. Sales of its Balanced Choice range of products, with fewer than 400 calories, continued to grow and new products such as fresh soups and steak and cheese rolls were well-received, it said.
According to Greggs, in the 53 weeks to January 3, total sales increased by 5.5%, with own-shop sales up 4.5%.
Own shop like-for-like sales in its fourth financial quarter grew by 6%. The company opened a total of 50 new shops, but closed 71.
Own shop sales rose by 8.2% in the five weeks to January 3, a significant increase in like-for-like growth compared with the previous year.
Strong level of trade
“Since our last update on December 15 we have experienced a very strong level of trade through the Christmas and New Year period,” said ceo Roger Whiteside.
“Customers have clearly responded to the improvements in our product offer and service, designed to meet the needs of the food-on-the-go consumer, during this busy period.
“This has been a year in which we have made good progress with our strategic plans and seen a welcome improvement in financial performance. We remain clear on our priorities and are confident that we can make further progress in the year ahead.”
