Newcastle-based Greggs said its total sales for the 26 weeks to July 1, 2023, rose 21.5% to £844 million and underlying profit before tax excluding exceptional items was up 14.2% to £63.7 million.
Like-for-like sales in company-managed shops grew 16% when compared with the equivalent period of 2022.
Interim dividend will rise 6.7% to 16p.
Greggs said 94 new shops opened in the first half, with 44 closures, leaving 2,378 shops trading as at July 1, 2023.
The firm continues to anticipate 150 net new shop openings in 2023.
Greggs said evening trade remains a fast-growing part of its business and represented 8.3% of company-managed shop sales in the first half, up from 6.5%.
Greggs CEO Roisin Currie said: “Greggs strong performance continued in the first half of 2023 as we deliver on our strategic growth plan.
“With consumers remaining under pressure, we continue to offer exceptional value, which is reflected in our performance and growing market share.
“In the period we continued to open further new shops, extended trading hours into the evening and saw increased participation in the Greggs App.
“Our ambitious plans for growth are on track and our amazing teams are committed to realising the opportunity to become a significantly larger, multi-channel business.”
REACTION:
Matt Britzman, equity analyst at Hargreaves Lansdown: “Forget sausage rolls, pizza and flatbread are the new best bites at Greggs as extended opening hours continue to hit the spot with consumers.
“This is a real opportunity if it can win hearts and minds at a time when disposable income is tight, the evening food-to-go market is huge and an area Greggs has barely scraped the surface of.
“With a fresh click + collect website waiting to be launched and a continued push to offer a better digital experience it’s making hay (or more accurately, vegan bakes) while the sun shines.
“Expansion doesn’t come cheap though, so the pressures on costs are high. Inflation ran hot over the half but it’s good to hear management still expects an easing from here out.
“But still, 9% over the year, if that comes to pass, is a tricky backdrop to navigate.
“Expect sales growth to ease from here out, as Greggs starts to lose the benefit of more favourable comparable periods, so the second half is where we’ll really see just how much progress is being made.”
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club: “This is another solid performance from Greggs in a challenging economic environment, with little sign so far of consumers cutting back on sausage rolls and pasties.
“Greggs is benefitting from doing the simple things well. It has a brand that resonates with consumers, and it augments that with sensible investments in stores, new ranges, supply chain and infrastructure.
“Some of the strong sales growth is explained by lapping the impact of Omnicron in the first nine weeks of last year. But the group has also successfully expanded its evening trade, and this has made a strong contribution.
“Importantly, cost inflation now appears to have peaked. Like-for-like cost inflation is seen falling from 11% in the first half to around 7% in the second. This should reduce the need for price increases and help Greggs to convert more of its sales to profit heading into 2024.
“Greggs isn’t out of the woods just yet. Cost inflation may have eased but it remains unsavoury. Meanwhile, pressure on the UK consumer could build into the second half as the impact of higher interest rates starts to bite.
“But Greggs is in a far better position than most retailers and is more than holding its own. Should inflation continue to moderate, the business could really be in a sweet spot.”