Total sales increased by 5% in the 13 weeks to October 3, as sales performance remains slightly ahead of the food-to-go retailer’s expectations.
The popularity of meal deals was a critical component in continuing like-for-like sales growth in the third quarter, said N+1 Singer analyst Sahill Shan.
“The fact that Greggs has once again comfortably outperformed demonstrates that it is progressively becoming less reliant on the high street and seeing excellent success with its transition to food-on-the-go strategy to locations where footfall is relatively high,” said Shan.
‘Menu improvements’
“Greggs also benefitted from further menu improvements, NPD [new product development] momentum and higher customer frequency on the back of a wider appealing retail / food proposition.”
View from analyst
“The fact that Greggs has once again comfortably outperformed demonstrates that it is progressively becoming less reliant on the high street."
- Sahill Shan, N+1 Singer analyst
Conlumino senior consultant George Scott said the “good times continue to roll” for Greggs as its Balanced Choice options meet demand for tasty, healthy food.
“With the winter months approaching, it has also relaunched its hot menu to include some traditional products with a higher quality touch such as an Aberdeen Angus spicy meatball melt baguette,” Scott said.
“Evolving its product around health and quality, as well as a respectable coffee menu, is developing Greggs’s reputation beyond basic pasties and sandwiches, giving it a stronger lure than traditional fast food chains such as McDonald’s, while offering a more accessible option to the like of Costa and Starbucks.”
Third quarter at a glance
- Own-shop like-for-like sales up 4.9%
- Total sales increased by 5%
- Opened 65 shops but closed 47 shops in year to date
£13M investment in depot
Greggs has announced a £13M investment in a freehold distribution depot next to its existing Enfield bakery. The depot was expected to start operations in second half of 2016.
The retailer has also refurbished 158 shops so far this year and remains on track to hit its target of 200 refurbishments by the end of 2015.
Greggs said in a statement: “This investment in refurbishing our estate continues to provide a good capital return and is transforming the quality of the shopping environment for our customers.
“We have now opened 65 new shops in 2015, including 35 franchised units predominantly in transport locations.”
The retailer has closed 47 shops in the same period, bringing the total number of its own shops to 1,588 and franchised units to 80.
View from Shore Capital: “Still on a roll”
“We have growing belief that Greggs’s growing self-confidence and building track record of in-store initiatives, new product innovation, delivery of the refit programme and ongoing change programme (expected to deliver £25m of benefits by 2018 over the 2013 cost base) will provide ongoing momentum to the Greggs story.”
- Clive Black and Darren Shirley, analysts at Shore Capital