Greggs backs full-year outlook as Q3 sales rise

(Sharecast News) - Greggs backed its full-year outlook on Tuesday as it reported a jump in third-quarter sales, underpinned by menu development and extended trading hours, and said cost inflation would be towards the lower end of guidance. In the 13 weeks to 28 September, total sales at the bakery chain rose 10.6%, while company-managed shop like-for-like sales were up 5% compared to the same period a year earlier.

Growth was supported by "menu development and further progress in extended trading hours and new digital channels," it said.

The chain, famous for its sausage rolls, said its new over-ice drinks range is already available in 800 shops, and this will be extended to a total of 1,000 shops by the end of the year.

The company has opened 86 net new shops in the year to date and is on track to open between 140 and 160 net new shops in 2024, including around 50 relocations.

"Greggs continues to extend its reach, bringing new shops closer to customers and establishing the supply chain capacity to support further growth," it said.

"With increased forward buying cover we now expect the overall level of cost inflation for 2024 to be towards the lower end of the 4-5% range previously communicated. At a time when consumers continue to face uncertainty Greggs offers exceptional value for money.

"Whilst acknowledging ongoing economic uncertainty, the board expects the full year outcome to be in line with its previous expectations. The board remains confident in the long-term growth opportunity for Greggs, and we are investing to support that growth."

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Greggs is one of those names you can just depend on to deliver the goods these days, and this morning's trading update didn't disappoint.

"Top-line growth is slowing, largely due to tougher comparable periods from last year, but it was good to hear the cost picture is coming in toward the low end of the guided range, meaning less pressure on margins.

"Credit where it's due, management has been on point with execution. Menu tweaks, a focus on the evening market, new delivery options, and a push for penetration on the app have all worked together to deliver ongoing outperformance."