Greggs on track to beat forecasts after sales jump

Bakery chain Greggs served up a slice of good news for investors yesterday as customers warmed to its new products and refurbished shops, putting its profits on track to beat expectations.

Greggs reported a 5.4 per cent jump in like-for-like sales for the 11 weeks to Saturday. Picture: Robert Perry

The group, which has 1,660 outlets, reported a 5.4 per cent jump in like-for-like sales for the 11 weeks to Saturday as it benefited from demand for its new low-fat sandwich range and improved coffee blend.

The improvement follows a drive by chief executive Roger Whiteside to increase focus on the food-on-the-go market, which accounts for 75 per cent of customer visits but is an area in which the firm has previously admitted it underperformed.

Whiteside said: “This strong performance reflects a positive response from customers to new product initiatives, improved service, better value and our investment in shop refurbishments alongside more favourable trading conditions.

“Whilst we face tougher comparatives in the final quarter, the combination of strong sales performance, lower costs and our outlook for the remainder of the year means that we now anticipate full-year profits to be materially ahead of our previous expectation.”

Greggs has completed 153 of the 200 shop refits planned for this year and said it is encouraged by the results so far. It has also opened 32 shops in the period and closed 43 of its worst-performing sites.

The company said ongoing deflation in commodity costs had also helped boost its margin performance, alongside its own drive to make savings.

Brokers at N+1 Singer raised their profit forecast for Greggs by 10.5 per cent, to £54.5 million, representing a 35 per cent cumulative increase since January.

And Shore Capital raised its recommendation on the stock from “hold” to “buy” following the “quite excellent trading update”. The broker now expects the firm to make about £52m this year, excluding £1.4m of property profits, a 12 per cent increase from its previous forecast.

Shore Capital analyst Clive Black said: “Progress in 2015 may be a little less dramatic but the basis to expect further earnings and dividends growth is stronger whilst rising cash balances materially boost the financial robustness of the group.”