Newcastle-based bakery and food retailer Greggs said on Monday it is experiencing a “level of sustained sales recovery” that is stronger than it had anticipated.
In a short trading update, Greggs said: “Greggs last reported trading performance on 10 May, at which point we had seen a strong recovery in sales levels following the easing of restrictions on non-essential retail across the UK.
“Since then we had expected to see increased competition as cafes and restaurants were allowed to compete more effectively with our largely take-out offer.
“In recent weeks the impact of pent-up demand for retail has reduced but, nonetheless, like-for-like sales growth in company-managed shops has remained in positive territory ranging between one and three per cent when measured against the same period in 2019.
“This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year.
“We will provide an updated picture when we present our interim results on 3 August 2021.”
AJ Bell investment director Russ Mould said: “Whereas some retail businesses only a temporary surge in sales as lockdown restrictions eased, thanks to pent-up demand, Greggs appears to have been able to sustain decent sales growth even after that initial flurry of activity across the retail sector in April.
“Competition has returned as more cafes and restaurants reopens their doors, but the lure of Greggs’ famous sausage roll has proved strong enough to make it the ‘food on the go’ retailer of choice for so many individuals.
“Movement of people either by foot, public transport or car is key to Greggs’ success.
“It has outlets strategically located in transport hubs, motorway service stations, shopping locations and offices.
“Assuming we’re not all stuck at home as per 2020, Greggs could do well given its affordable prices and formula for having attractive products and ability to appeal to customers throughout the day.
“Some places like cafes are overly dependent on the morning trade, for example, whereas Greggs gets customers on their way to work, for mid-morning and mid-afternoon snacks, lunchtime and on the way home from work.
“That gives it a major advantage and sees the tills ringing throughout the day.
“Greggs was cautious when the company last updated and it’s interesting to see management not shouting from the rooftops despite better-than-expected trading.
“That’s the correct stance to take as there is still a lot of uncertainty across the UK.
“It also isn’t clear how much of the commuter trade will return as so many companies still haven’t decided on their new working location strategies.”