Newcastle-based Greggs said its total sales for the 52 weeks ended December 30, 2023, rose 19.6% to £1.809 billion, as the firm outlined plans to expand its production capacity and to open up to 160 new shops.
Greggs shares rose about 6% to around £26.10 to give the Newcastle company a stock market value of roughly £2.7 billion.
Greggs said like-for-like sales in company-managed shops in 2023 were 13.7% higher than those seen in 2022.
Fourth quarter like-for-like sales in company-managed shops grew by 9.4%.
Greggs said the strong finish to the year “reflected the favourable Christmas trading pattern and less disruption than we saw in the same period of 2022.”
In a Q4 trading update, Greggs reported: “Our strong LFL sales performance demonstrates the popularity of the Greggs brand as we further develop our range and make Greggs more accessible through digital channels and extended trading hours.
“By the end of 2023 Greggs was available for delivery on the Uber Eats platform in 710 of our shops, in addition to the service provided through our existing partner Just Eat.
“Seasonal lines, including our iconic Festive Bake, Chocolate Orange Muffin and Christmas Lunch Baguette were in high demand in the fourth quarter, featuring alongside our shop-baked Sweet Mince Pies and festive hot drinks.
“Pizza continues to perform strongly during the day and into the evening, with pizza boxes and pizza bundle deals continuing to contribute to our growth …
“In 2023 we opened a record 220 new shops and closed 75 shops (33 closures and 42 relocations), giving a total of 2,473 shops trading at 30 December 2023 (comprising 1,970 company-managed shops and 503 franchised units).
“Our shop openings are giving customers more convenient access to Greggs, whilst our relocation activity increases our capacity in existing successful catchments.
“The planned investment in our supply chain is progressing well, which supports our ambitious growth plans.
“A fourth production line is currently being commissioned at Balliol Park in Newcastle upon Tyne and will provide significant additional 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 later in 2024.”
Greggs said it ended 2023 with a cash position of £195 million (2022: £192 million) “which will support our plans to invest further in growing both our shop estate and supply chain capacity in the years ahead.”
The firm expects to open between 140 and 160 net new shops in 2024.
“Given the strong trading in the final quarter the board anticipates reporting a full year outcome for FY23 in line with its previous expectations,” said Greggs.
“As expected, inflationary pressures are reducing and with good forward cover on food, packaging and energy we anticipate a more stable cost base in the coming year.
“Wage inflation remains, although higher rates of pay across the economy will also provide support to consumer incomes.
“Overall, we are confident that Greggs can deliver another year of good progress in 2024 as we continue our plans for sustainable growth.”
Greggs CEO Roisin Currie said: “2023 was a year of further progress by Greggs.
“I am proud of our teams, who did a fantastic job serving more customers as we continue to grow our shop estate and offer greater availability through digital channels and extended trading hours.
“We enter 2024 with plans to continue to invest in our shops and expand supply chain capacity to deliver the growth strategy, supported by our strong balance sheet.
“Our value-for-money offer, and the quality of our freshly prepared food and drink continue to evolve and position us well for further progress in the year ahead.”
Victoria Scholar, head of investment, Interactive Investor: “Greggs reported like-for-like sales up 9.4% in the fourth quarter. Full-year total sales rose by 19.6% to £1.81 billion, ahead of forecasts for growth of 18.1%.
“Shares in Greggs are surging today, extending gains off the October lows, helping to reverse some of the declines from the highs at the start of May.
“Investors are cheering its impressive period to wrap up the year with strong demand for its festive products such as the Christmas lunch baguette and the Festive Bake, partly thanks to fun marketing with the return of Greggs’ own novelty Christmas jumper.
“It is also benefitting from the recent disinflationary trajectory that has helped to reduce its cost pressures.
“Its low price point makes Greggs resilient to the macroeconomic headwinds, cost-of-living pressures, and the consumer slowdown.
“Its range of value hot and cold comfort food and drinks appeal to a wide customer base including a vast number of workers who are on the move throughout the day.”
Matt Britzman, equity analyst, Hargreaves Lansdown: “A solid final quarter means Greggs can tick off 2023 as a year of real progress. Double-digit growth in like-for-like sales was down to extended opening hours, more delivery options, improving supply chain capacity and a fresh new suite of tasty treats.
“Festive Bakes and Chocolate Orange Muffins lead the way over Christmas but bears may point to sales growth slowing over the year, and the fourth quarter was the lowest of 2023.
“That’s largely because Greggs was able to limit price hikes as inflation cooled. Longer-term, that’s a net positive.
“One of Greggs‘ key strengths is offering a lower value treat and keeping that proposition intact is key, especially when consumer incomes are stretched.
“The most important thing is to see volumes trend higher, and that remains the case.
“The job’s not done. Expect to see more progress over 2024 as investment continues into the digital offering, delivery partnerships and expanding the store estate.”