Gregg’s revenue growth slows despite extended trading hours

Shares in Greggs fell on Tuesday after the group posted slower sales growth despite a boost from new products and longer opening hours.

The major bakery chain said sales rose 10.6 percent in the thirteen weeks ending September 28, meaning total sales were up 12.7 percent since the start of the year.

But like-for-like sales at company-operated stores grew 5 percent in the third quarter, about two-thirds less than the 14.2 percent growth rate recorded in the same period last year.

Business peaked in September, just after the launch of the autumn menu, which featured traditional customer favorites such as the salted caramel lattes and new items such as the pumpkin spice donut and all-day baguette.

Greggs said its new range of over-ice drinks is currently available in 800 stores, but is expected to be in 1,000 stores by the end of 2024.

It also attributed the growth to “further progress in longer trading hours and digital channels.”

The Newcastle-based company has gradually increased the number of stores that stay open until the early evening.

This went hand in hand with an expansion of the retail offering, which now totals 2,559 stores, following the launch of 86 new points of sale so far this year.

Greggs still expects between 140 and 160 stores to open in 2024 and that cost inflation will be at the lower end of the indicative range of 4 to 5 percent.

It told investors: ‘While the board recognizes ongoing economic uncertainty, it expects the full year outcome to be in line with its prior expectations.

“The board remains confident in the long-term growth opportunities for Greggs, and we are investing to support that growth.”

Earlier this summer, Greggs increased prices on a number of popular items, such as its cheese sandwiches and vegan sausage rolls, partly under pressure from higher labor costs.

The UK’s National Living Wage has risen by around 10 per cent to £11.44 for people aged 21 and over from April, while the national minimum wage for young people and apprentices has risen by 12 to 21 per cent.

Mark Crouch, market analyst at eToro, said: ‘Despite consumers trying to ease the pressure of higher food prices, Greggs has excelled in a still challenging environment.

‘Cooling inflation has undoubtedly contributed to the impressive performance, and while interest rates are expected to fall further next year, investor interest in Greggs is likely to increase.’

Greggs Shares were down 3.1 per cent at £30.28 on Tuesday morning, but are still up around 15 per cent this year.