Greggs is starting the year on a healthy note with a strong increase in sales thanks to discounted treats and later store hours
- Bakery chain revealed that sales increased 17.1% on a like-for-like basis
- Greggs has warned earnings this year would be impacted by rising cost inflation
- Longer store opening hours stimulated purchases of pizzas and chicken goujons
Greggs started the year with tremendous sales growth as it benefited from strong demand for affordable treats.
The bakery chain revealed that sales increased by 17.1 per cent on a like-for-like basis in the first 19 weeks of 2023, while total sales increased by more than £100 million to £609 million.
Trading increased significantly compared to the same period last year, with the start of 2022 hit by the omicron variant of Covid.
This reduced commutes to city centers after Britons were again encouraged by the government to work from home.
Caustic: Greggs started the year with tremendous revenue growth as it benefited from a lack of pandemic restrictions and strong demand for affordable meals
In addition to the absence of travel restrictions, the company has benefited from extended opening hours at hundreds of outlets that are encouraging the purchase of hot food items such as pizza and chicken goujons.
Additionally, Greggs noted that demand for his plant-based products had been boosted by the popularity of his newly created vegan Mexican chicken-free fry up.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said: ‘British consumers may be proving a little flaky when it comes to large items, but appetites are still strong for pasties and sausage rolls on trips to the shops. , during lunch breaks or outings.’
She added that the low price of Greggs’ treats helped “keep sales high amid the cost-of-living crisis.”
The Newcastle-based group has warned earnings this year would be impacted by rising cost inflation of around 9 to 10 percent, driven mainly by staff salaries and skyrocketing utility bills.
Costs have been passed on to customers through price increases, including for the famous sausage rolls, which now cost £1.20 each after being £1 in early January 2022.
Analysts predict Greggs will report around £163m in pre-tax profit for 2023, compared to £148.3m last year.
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said: “The cost of raw materials, energy and wages are all rising rapidly, and Greggs has significant exposure to all three.
“But inflation at least seems to have stabilized and is not getting worse. And it is crucial that sales are rising sharply, which provides oxygen to absorb the cost pressure.’
Greggs is also plowing ahead with a store expansion program, aiming to open more than 3,000 UK stores sometime in the second half of this decade.
After opening a record number of stores in 2022, it announced plans in March to open an additional 150 outlets and 24-hour drive-thru locations this year.
So far this year it has opened 63 new stores, including in Canary Wharf and at Cardiff and Glasgow airports.
Greggs shares were 2.4 per cent lower at £27.76 on Tuesday morning, although they have grown by more than a quarter in the past six months.