The Greggs share price is up by over 1% on Monday morning
Greggs (LON:GRG), the baker, said that its recovery in sales surpassed its own expectations, which it believes could have a positive impact on the FTSE 250 company’s end of year results.
The company initially expected its sales to be negatively impacted by further competition as restaurants and cafes began reopening as lockdown restrictions continued to be eased.
However, Greggs confirmed that its sales have grown recently.
“In recent weeks the impact of pent-up demand for retail has reduced but, nonetheless, like-for-like sales growth in company-managed shops has remained in positive territory ranging between 1 and 3 per cent when measured against the same period in 2019,” the company said in its latest trading update.
The company also suggested that its end-of-year profits could exceed expectation and reach levels seen before the pandemic if the government continues to ease lockdowns at its current rate.
“Whereas some retail businesses only a temporary surge in sales as lockdown restrictions eased, thanks to pent-up demand, Greggs appears to have been able to sustain decent sales growth even after that initial flurry of activity across the retail sector in April,” says Russ Mould, investment director at AJ Bell.
“Movement of people either by foot, public transport or car is key to Greggs’ success. It has outlets strategically located in transport hubs, motorway service stations, shopping locations and offices. Assuming we’re not all stuck at home as per 2020, Greggs could do well given its affordable prices and formula for having attractive products and ability to appeal to customers throughout the day.”
“Some places like cafes are overly dependent on the morning trade, for example, whereas Greggs gets customers on their way to work, for mid-morning and mid-afternoon snacks, lunchtime and on the way home from work. That gives it a major advantage and sees the tills ringing throughout the day.”
The Greggs share price is up by 1.05% on Monday morning to 2,587p.
Back in March Greggs reported its first loss in 36 years during 2020 as sales dropped by a third following nationwide lockdown measures.