Greggs delivered a sharp rise in first-half profit and continued to take market share, as its value-led offer held up in what the baker called a still-challenging food-to-go market.
Despite the tough backdrop, total sales for the 26 weeks to 27 June rose 7.2% to £1.10bn, with like-for-like sales up 2.1% in company-managed shops and 1.3% across franchised outlets.
Operating profit climbed 22.9% to £86.5m, and pre-tax profit rose 19.7% to £76.0m, helped by a soft comparator, growth in the grocery business, tight cost control and the phasing of cost inflation.
Adam Vettese, market analyst for etoro, says: “In a still-tough consumer climate, Greggs’ value credentials are doing the heavy lifting. Customers are still queuing for sausage rolls and steak bakes, while grocery partnerships and new stores added an extra boost. Cost control and an easy year-ago comparison helped the bottom line look especially solid.”
Investors clearly liked what they saw from the baker on Wednesday, and shares jumped 10%.
The key to Greggs ‘ success in the first half was getting customers through the door. The chain grew its share of food-to-go visits by 0.3 percentage points to 8.7% over the year to June, even as visits across the wider market fell 1.9%.
Menu innovation is becoming a theme for Greggs as it continues to shake up its offering. A new Chicken Roll launched in April quickly became a favourite alongside the sausage roll, while iced matcha lattes tapped into a fast-growing health trend and helped pull in younger customers. An enhanced salad range and bolder hot food and pizza lines rounded out the offer, with the company crediting new products for supporting like-for-like growth.
Greggs added 34 net new shops to reach 2,773, and is trialling smaller formats such as the “bitesize Greggs” and a self-service “Greggs Express” for convenience sites.
It also opened its first airport outlet outside the UK, in Tenerife, alongside travel operator Lagardère. The group now expects 100 to 110 net openings this year and still sees scope for at least 3,500 UK shops over the longer term.
Today’s update from Greggs is an exemplary example of a company focusing on its weakness, finding solutions, and pushing ahead despite a tough market.