14 May 2024
If you are covering Greggs’ latest trading update, please find below a comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
“Greggs continues to prove robust despite a challenging economic environment, with it providing a fairly positive update on the first 19 weeks of the year. Sales are up 7.4%, which does mark a mild slowdown compared to when the group last provided an update at the nine week mark (+8.2%), but nevertheless volume growth continues to be supported by a combination of delivery sales, evening trade and increased participation on the Greggs app.
“Hot food continues to perform well, however, the menu continues to evolve, with new iced drinks range being rolled out for the summer and this should receive traction from consumers in the warmer months.
“So far for the year Greggs has opened 27 net new stores, with recent openings at Embankment Underground Station, and a few within the likes of Tesco and Sainsbury – expanding its footprint beyond just the traditional high street. The release states that the pipeline remains strong, with further opportunities with supermarket groups, and Greggs remains confident in achieving their target of 140-160 net openings per year.
“The business also continues to invest in its supply chain, with investments expected to extend capacity to 3,500 shops. Upcoming distribution centres at Birmingham and Amesbury are expected to add additional logistics capacity by the end of 2024, and the development of two new sites in the Midlands which are expected to be operational by late 2026/early 2027 to drive capacity in the midterm.
“It is this strong investment backdrop, along with sales holding up well that makes Greggs such a competitive company. It has managed to create for itself unique growth opportunities, along with a compelling value proposition and this is allowing it to ride out a tough consumer landscape.”
