Greggs posts steady sales growth and expects cost headwinds to ease

 
Oliver Gill
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Greggs operates across 1,830 outlets (Source: Getty)

Greggs today posted five per cent growth in like-for-like third-quarter sales.

Total sales swelled by 8.6 per cent as the baker closed 32 shops and opened 98 new ones. Over the year, sales grew by 7.8 per cent and 3.9 per cent on a like-for-like basis.

Greggs said it expects "headwinds" from increased costs to ease towards the end of the year.

Shares in the group were up more than two per cent by mid-morning.

Read more: Greggs is gaining as healthy eating range helps to drive up sales

The baker said its shop estate stood at 1,830 outlets at the end of September, of which 194 were franchised. The firm said it expects to open 140-150 stores during the year and close 40-50.

Some 120 of Greggs' stores have been refurbished so far this year, the company said, putting it on track to complete a total of 130 by the year-end.

The firm also revealed a new autumn range that included an all-day breakfast wrap and Thai chicken soup.

Read more: On a roll: Greggs to maintain profits despite inflationary pressures

"Our investment in greater product availability and service has benefitted recent trading," the bakery chain said.

"As we have previously indicated, food ingredient cost pressures are a headwind, although we continue to expect that the rate of increase will begin to ease towards the end of the year. Accordingly, our expectations for the full year outturn remain unchanged."

Hargreaves Lansdown equity analyst George Salmon said: “Increasing like-for-like sales, plus the planned addition of around 100 net new shops this year means Greggs has got all the ingredients of an attractive roll-out story.

"It’s good to see the group investing to ensure its menu doesn’t become stale too. New breakfast options and balanced choices like Thai Chicken soup are gaining increasingly popularity with customers, and are a step forward as the country becomes ever more health-conscious."

He continued: "New shop openings and spending on manufacturing and distribution operations has seen capital investment creep up, while higher ingredient costs continue to prove a headwind. However, Greggs’ growing franchise model should help cash generation remain strong, and the system changes have boosted sales in this quarter.”

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