Greggs recorded an underlying pre-tax profit of £55.5m for H1
Greggs (LON:GRG) said on Tuesday that its profit will be ahead of expectations as the baker moved back into the black during the first half of the year.
The announcement came about thanks to a strong recovery in sales following the easing of restrictions.
The FTSE 250 company, famous for its sausage rolls, recorded an underlying profit before tax of £55.5m for H1 ending in early July, compared to a pre-tax loss of £64.5m during the same period a year before.
Greggs’ total sales came in at £546.2m, well up from £300.6m. However, compared to two years ago, prior to the pandemic, sales were 9% down.
Even though Greggs’ stores remained open during the pandemic, its business model, which relies heavily on footfall, was vulnerable.
The company will resume dividend payments with a proposed 15p per share payout for the first half of the current financial year.
Ross Hindle, Analyst at Third Bridge, commented on Greggs following the company’s results announcement:
“Greggs has had a tough H1 with two-year like-for-like sales down 9.2%. However, all is not lost as the overall UK food-to-go market remains depressed by around 20% as many knowledge workers stay away and the pingdemic takes a toll. Greggs has been able to punch above its weight in food-to-go because it has had less restriction exposure, and it sells the value products cost-conscious first-returners desire.”
“A decline in foot traffic, coupled with higher average transaction values have been a theme across the entire food-to-go sector. However, compared to its competitors, Greggs continues to suffer from relatively small average transaction values. People simply spend more in Pret or Leon. Our experts expect Greggs’ to focus on closing this ticket size gap by improving their food range and continuing to promote their coffee offering, an important lure to drive foot-traffic and promote more cross-sell purchases.”
Specialists expect Greggs to capitalise on the increase in prime location vacancies and expand their store and drive-through footprint. “A prime example of this is Greggs new shop in Canary Wharf, which has been on a sizzling run since opening, despite depressed commuter levels,” said Hindle.
 said that its profit will be ahead of expectations as the baker moved back into the green during the first half of the year.){kind=link}