Greggs confident as UK appetite for his cakes and coffee grows

LONDON, Aug 1 (Reuters) – Greggs (GRG.L) It stuck to forecasts that profits were up 10% this year as British consumers continued to seek value in baked goods, salads and coffee, and its evening opening hours and loyalty app helped boost sales.

As high inflation in Britain cuts into disposable income, the bakery chain said it was gaining market share with its focus on affordable food and the launch of new ranges, including its sweet chilli chicken noodle salad and its mexican bake without chicken.

Underlying sales rose 16% in the 26 weeks ending July 1, driving underlying earnings before tax, excluding exceptional items, by 14% to 63.7 million pounds ($81.7 million). ), which, according to the CEO of Greggs, reflected its lower prices compared to competitors.

“When they (customers) are out and about and need takeout, we hope they come and shop with us more often because that’s an option that can save them money,” CEO Roisin Currie said Tuesday.

Rising costs have hit Greggs, but he expects inflation to moderate in the second half from 11% to 7% in the first, putting the annual rate at 9%.

Greggs carries 2,400 stores and will open 150 new stores in the course of this year, including outlets in large supermarkets such as Tesco. (TSCO.L)as well as at airports.

Goodbody analysts said that while the update showed Greggs continued to perform strongly, “we see little in today’s update to lift the stock from current levels.”

Greggs shares sank 4% to 2,637 pence in early trading. Over the last 12 months, the stock has gained 27%, far outperforming the British mid-cap index. (.FTMC) which is down 5%.

Analysts expect Greggs to report a pre-tax profit of around 163 million pounds ($205.7 million) this year, according to Refinitiv, up 10% from 2022.

The company raised its interim dividend by 7% to 16 pence per share.

($1 = 0.7798 pounds)

Reporting by Sarah Young; Edited by Kate Holton and Bernadette Baum

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