Greggs First-Quarter Results – What The Analysts Said

By Steve Wynne-Jones
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Greggs First-Quarter Results – What The Analysts Said

High street bakery firm Greggs has reported a 27.4% increase in like-for-like sales in the first quarter of its financial year, although this compares to a corresponding period last year that was affected by COVID-19 lockdowns.

Commenting on its performance, the group said that it 'made a good start to 2022, with sales in line with our plan and a strong pipeline of new shop acquisitions ahead'.

Here's how leading industry analysts viewed its performance.

Walid Koudmani, XTB

"[Greggs] reported a 27.4% rise in like-for-like sales for the first 19 weeks of the year but this does come in comparison to the same period last year where trading was restricted due to the UK COVID mitigation restrictions.

"There really isn't any massive surprises in this earnings update from Greggs given the profit warning issued in early March. Yet the company is facing serious cost headwinds both on staffing and supply, which will ultimately force it to raise prices - something it's already hinted towards in a previous update. Given the firm's brand is known for value for money, this is where we will start to see the loyalty of its large customer base tested.


"We have not seen a huge reaction from investors with Greggs shares price trading largely unchanged on the day. It's worth mentioning that the share price remains 38% down on the year and we have yet to see any bargain hunting take place, which is evidence that investors remain unconvinced so far."

Hannah Cleland, GlobalData

“Recent inflation has put value-for-money brand, Greggs, in a tricky position in terms of managing its pricing and margins. Other big-name foodservice brands such as McDonalds can empathise, as it announced its own price hikes in the first quarter of 2022. Although these issues are only just starting to take their toll on the fast-food industry, a healthy menu drive could be one solution but creative marketing will be pivotal.

“Greggs’ on-the-go budget positioning will suffer, as price hikes see people plan and cook meals more regularly at home. Shrinkflation is also receiving significant negative press as many feel ripped off by smaller portions.

“However, given recent regulations surrounding HFSS (High Fat, Salt & Sugar), this might be an opportunity to change the narrative. Smaller portion sizes when marketed effectively can be positioned as ‘better-for-you’ because they immediately cut the calories. With a creative spin, Greggs may be able to cash in on demand for convenient, yet healthy breakfast and lunch options.”


Russ Mould, AJ Bell

“Food on the go firm Greggs must have hoped 2022 would be a positive year marked by the recovery from COVID – with footfall getting back to pre-pandemic levels. It’s not shaping up that way and it’s notable how the company is only guiding for full year profit to be a bit ahead of the 2021 outturn.

“The problem facing Greggs is like the one facing lots of businesses – for the first time in a generation inflation is a real factor. The cost of raw materials and staff is going up fast and that’s a particular problem for a value-based proposition like Greggs which has limited scope to pass on these costs to consumers if it is to retain its bargain credentials.

“At least the nature of Greggs’ products should offer some insulation from cost-of-living pressures. Spending just over a quid on a sausage roll is the kind of impulsive purchase which people will probably still engage in without thinking twice, unlike buying a new sofa or a new car."

Barclays European Food Retail Equity Research

"Robust Q1 trading update, outlook unchanged. LFLs (1 year) for first 19 weeks of 2022 are +27.4%. This is an optically strong number, but is set against lockdown restricted trading in the prior year.


"Since the company last reported, LFLs in the last 10 weeks to 14 May when lockdowns in 2021 were easing has averaged 15.8%, although the company “expect this figure to continue to normalise as we start to compare with more robust trading periods in 2021”. Last time the company reported, (first 9 weeks), LFL sales in company-managed shops were +3.7% on a 2 year basis, or +44.2% on a 1 year basis, against lockdown affected period in 2021.

"It is no surprise that trading has slowed in the more recent 10 weeks given easing of lockdown restrictions in the comps. LFLs in the first 10 weeks of FY21 (2-year basis) were -23.3%, improving to -3.9% in the following 8 weeks, meaning that 2 year LFLs were -13.5% after 18 weeks in FY21."

Clive Black, Shore Capital

"The corresponding period in FY21 was considerably conditioned by lockdown 3.0 just as Q1 FY20 was partially, but materially, distorted by lockdown 1.0; the pandemic having had a notable impact upon the past two years for Greggs, one to its credit where it has emerged as a strong business with a rebuilt balance sheet with still robust value credentials as the UK goes into a consumer recession, perhaps a long and deep one.

"In terms for business leadership, composition and strategy, Greggs is about to be led by Roisin Currie, the group's first female CEO, which to us is great to see. Ms Currie replaces Roger Whiteside, who has transformed Greggs for the better it should be said, in the leadership spot, a role for which we wish her well."


© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.


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