Bakery Firm Greggs Increases Profit Outlook After Trading Recovers
British bakery chain Greggs has raised its profit outlook on the back of a strong recovery in sales following the easing of COVID-19 restrictions.
The group said like-for-like sales in the eight weeks to May 8 were down 3.9% versus the same period two years ago, having been down 23.3% in the 10 weeks to March 13.
That gave a figure of down 13.5% for the 18 weeks to May 8.
'In recent weeks, following the easing of restrictions across the UK, we have seen a strong recovery in sales levels. With trading in 2020 having been severely impacted by the temporary closure of our shops we are now reporting like-for-like sales performance on a two-year basis, against the comparable period in 2019,' the company said in statement.
Greggs has also rolled-out its delivery service to 800 shops, with sales from this channel representing 8.2% of company-managed shop sales in the most recent eight week period.
'Sales have recovered well in recent weeks as out-of-home activity levels have increased, albeit in the absence of competition from indoor seated catering operators,' Greggs said.
'If restrictions continue to ease in line with current plans then we now expect our overall sales performance for the year to be stronger than we had previously anticipated. Costs have been well-controlled and the rate of cost inflation we are experiencing is in line with our plans for the year.'
Greggs made a record pretax profit of £108.3 million in 2019 before slumping to a £13.7 million loss in 2020, a period in which it was forced to announce job cuts.
The company expects that profits for 2021 are likely to be 'materially higher' than the previous year, as lockdown measures ease.
Commenting on Greggs' performance, AJ Bell investment director Russ Mould said, “The reopening of non-essential retail has got people out of the house and Greggs has benefited from increased traffic and temporarily reduced competition from cafes and restaurants. A greater number of people returning to the office will also have helped, as workers nip out at lunchtime for a sandwich and a coffee.
“Greggs’ progress pre-pandemic made it one of the big retail success stories, shedding its baker identity to become a major force in food on the go. As the pandemic struck, food on the go became food at home and so Greggs had to think on its feet.
“Now it is betting on a big recovery in pre-pandemic activity once considered ‘normal’, namely going to work in an office, meeting friends and family for social activities, and more movement via personal and public transport around the country. Its stores are conveniently placed to attract people as they go about their day."