Newcastle-based Greggs reported that its third-quarter total sales rose 20.8% for the 13 weeks to September 30, 2023, with company-managed shop like-for-like sales up 14.2%.
The firm reported that 82 net new shops opened year-to-date — 144 openings less 62 closures — and Greggs expects between 135 and 145 net shop openings in 2023 and circa 40 relocations.
Evening trade represented 8.8% of company-managed shop sales for the quarter.
The Newcastle firm said full year outcome is expected to be in line with its previous expectations.
It expects capital expenditure in 2023 to be around £200 million.
“This strong LFL performance, founded on increased customer visits, reflects ongoing development of evening trading and of our digital channels and loyalty programme through the Greggs App,” said Greggs.
“Evening trade (sales post-4pm) represented 8.8% of company-managed shop sales for the 13 weeks to 30 September 2023 (H1 2023: 8.3%) and Greggs App participation continues to grow, with 13.1% of company-managed shop transactions scanned in the 13 weeks to 30 September 2023 (H1 2023: 10.6%).
“Market insight data confirms that Greggs continues to grow its share of the food-to-go market and has maintained its leadership positions in customer satisfaction and value-for-money ratings (source: Circana, August 2023).
“Our autumn menu is now available, featuring the Spicy Chicken and Veg Bhaji Baguette, served hot.
“New vegetarian options include the Cheese and Honey Mustard Toastie, the Veg Bhaji Flatbread and the Mozzarella and Cheddar Bites, offering customers a new hot-to-go snacking option.
“We’ve also introduced the Spicy Veg Pizza, available to customers on Click + Collect and via delivery.
“Additions to the hot drink menu include the return of the popular Pumpkin Spice Latte and the new Hazelnut Mocha and Hazelnut Hot Chocolate …
“Investment in our supply chain is progressing well, supporting our ambitious growth plans.
“A fourth production line will be commissioned at Balliol Park in Newcastle upon Tyne in the coming weeks, adding further manufacturing capacity for our iconic savoury rolls and bakes.
“Work is progressing well to expand the logistics capacity of our Birmingham and Amesbury distribution centres, both of which are due to come on stream in 2024.
“Across the business we continue to expect capital expenditure in 2023 to be around £200 million, supported by our strong balance sheet.”
In its outlook, Greggs said: “As we had expected, the rate of cost inflation has eased as we annualise on the significant commodity-led increases experienced in 2022.
“At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share.
“We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions.
“Whilst acknowledging the uncertainty in the economy as a whole and the very strong comparative performance of the business in the fourth quarter of 2022, the board expects the full year outcome to be in line with its previous expectations.”
REACTION:
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 has continued to gain market share in a difficult environment which is mightily impressive. There is no doubt Greggs’ brand is resonating strongly with the UK consumer and is in fine fettle.
“The cost of raw materials, energy and wages have risen rapidly over the last year, but encouragingly these cost pressures are now beginning to ease.
“This isn’t just good news for profit margins but should also help underpin consumer demand by reducing the need for price increases.
“Overall, Greggs’ performance so far this year is impressive. At the start of 2023 the outlook for Greggs looked extremely unsavoury.
“But the economy has held up better than expected and the group’s execution has been excellent. With cost pressures easing, the business looks well primed for a return to profit growth in 2024.”