Bakery retailer Greggs has seen meaty growth over the first half of this year, as it announced sales were up 7.3 per cent to £453m.
Like-for-like sales increased by 3.4 per cent in company-managed shops, with coffee and breakfast, “balanced choice” options, hot food choices and “traditional savoury flavours” driving the trend.
Pre-tax profit including property profits and exceptional charges amounted to £19.4m.
“As expected, the business experienced pressure from cost inflation. But despite this, operating profit before property gains and exceptional items grew by 1.8 per cent to £27.6 million,” said chief executive Roger Whiteside.
The retailer opened 61 new shops in the first half, including 24 franchises. Along with the closure of 19 shops, this left it with 1,806 shops trading at the beginning of July.
Greggs also opened its first “drive-thru” in June, located in Greater Manchester, and has been “encouraged by its popularity”.
“A highlight of the first half was the completion of the roll-out of the company’s central stock forecasting and replenishment system, which is already showing benefits in availability of the right products at the right time of day,” said Paul Hickman, an analyst at Edison Investment Research.
“Additional costs of implementing the system and initial higher wastage are the main reasons for pre-tax profit of £27.9m being below that of the first half of 2016 of £29.4m, but efficiency gains should close that difference in the second half.”
Greggs announced an ordinary interim dividend per share of 10.3p, up 8.4 per cent. Its share price fell on the open, but has since recovered and was up 0.55 per cent at the time of writing.
Although Greggs has seen growth, analysts are warning that this should not imply a healthy environment across the high street.
“We do not think that today’s announcement is necessarily a reflection of the UK high street consumer sector, as online is continuing to challenge bricks-and-mortar retailers,” said Investec's senior investment director Elissa Bayer.
“Sandwiches remain one of the few products that require the shopper to turn up generally on foot and in that market, Greggs is proving a winner.”