Sausage roll seller Greggs has seen shares dip after admitting city sales still lag behind the rest of its sites.
Although the bakery chain said it had had a “good” start to 2022 on Monday, shares were down some 2.8 per cent in the afternoon.
The firm has been reshaping its portfolio of stores to match demand, launching 49 new shops in the first 19 weeks of the year.
Greggs said its sales had increased 27.4 per cent compared to the same time last year, from £378m in the first 19 weeks of 2021 to £495m this year.
The Newcastle headquartered firm said sales had begun to recover from the impacts of the pandemic, as it said its chicken goujons and potato wedges have proven particularly popular.
Sales in larger cities and office locations continued to lag, however sales at “transport locations” had surged in recent weeks, a trading update revealed.
The bakery said it had closed six shops and opened 49 new ones – including new stores in Birmingham and Liverpool airports – bringing its total number of stores up to 2,224 as of 14 May.
Looking ahead, Greggs said it expected inflation to bite, as the high-street bakery said it was aiming to mitigate the impact of cost pressures while protecting its own reputation for quality.
Analysts from Third Bridge warned that the company’s EBIT margin would continue to be under pressure over the coming months, due to input costs and delivery taking a larger chunk of sales.
“The big unknown is how consumers react to the rising costs and tightening of wallets,” Third Bridge’s Ross Hindle, added.
However, he noted: “It is believed that there is an opportunity for Greggs to gain market share from ‘posh’ coffee shops and more expensive food-to-go operators as Britons cut back on their mealtime and beverage spend.”
The chain was “clearly worried” that a squeeze on discretionary spending “may lead to some flakier sales,” in the months to come, Susannah Streeter, senior investment and markets analyst for Hargreaves Lansdown, said.
However, analysts noted the company had a strong e-commerce offering in place, plus cheap prices compared to other high street rivals.
Its takeaway options were likely to “stay reasonably resilient over the longer term” given their affordable price and popularity, Streeter said.
The trading update comes as Roger Whiteside prepares to step aside from his role leading the bakery, with Greggs’ retail and property director Roisin Currie set to step into his shoes.