Bakery chain Greggs has returned to profit in the first half of its financial year, and said it expects annual profit to be slightly ahead of its previous expectations.
Greggs, best known for its sausage rolls, steak bakes, vegan snacks and sweet treats, reported an underlying pretax profit of £55.5 million (€64.96 million) in the six months to July 3 compared to a pretax loss of £64.5 million (€75.5 million) in the same period last year.
Total sales were £546.2 million (€639.4 million), up from £300.6 million (€351.9 million).
Greggs 'Showed Resilience'
"Greggs once again showed its resilience in a challenging first half, emerging from the lockdown months in a strong position and rebuilding sales as social restrictions were progressively relaxed," commented Roger Whiteside, chief executive.
"We continue to make good progress with our strategic priorities, growing the shop estate and investing in our digital capabilities to compete in all channels and dayparts of our market.
While Greggs' shops were allowed to stay open during COVID-19 lockdowns, the crisis disrupted its business model, which relies on a high volume of customer visits.
Like-for-like sales compared to the same period in 2019, before the pandemic impacted trading, were down 9.2%, with Greggs forced to cut jobs in recent months.
However, they have been positive since non-essential retail stores re-opened, driving increased customer numbers.
In May, Greggs said annual profit could reach 2019's record level of £108 million. The group is also paying an interim dividend of 15 pence, its first payment since 2019.
"Whilst there continue to be general uncertainties in the market, given our recent performance we now expect full year profit to be slightly ahead of our previous expectation," Whiteside added.
Last year, the group saw sales drop by close to a third, it said back in March.
Commenting on the group's performance, analyst Russ Mould of AJ Bell said, “Greggs continues to deliver robust numbers and once again raises earnings guidance. Footfall to its shops is still lower than pre-pandemic, but those who are visiting are spending more and Greggs now also has a thriving delivery service to keep the tills ringing.
“More people back working in the office should play well to Greggs as that should drive more traffic to its stores at lunchtime and for coffee breaks in the morning and afternoon. Equally, expansion of its car-based sites including drive-through stores is well timed given how many people have stuck to their own four wheels rather than use public transport since the pandemic began.
“Greggs is reaping the benefits of having built up a good reputation for quality products at affordable prices. As economic activity picks up, its brand strength should see it act as a magnet for hungry individuals."