In its trading update yesterday Greggs upgraded its profit expectation for the current financial year, due to ‘an exceptionally strong start to the year’, with shares rising 8% in early morning trading. Laith Khalaf, senior analyst at Hargreaves Lansdown discusses the part played by its vegan sausage roll launch.

In an analysts note, Laith Khalaf, senior analyst at Hargreaves Lansdown said: “The new vegan sausage roll has helped bring home the bacon for Greggs, prompting a spike in sales at the start of this year. The company has therefore upgraded its profit expectations for the coming year, and that’s sent the share price up sharply.

“It’s unclear how much of the boom can be attributed to sales of actual vegan rolls rather than simply the publicity associated with the launch. However catering for vegan diets is now rising up the priority list for many food retailers, with M&S recently launching its new vegan range, Plant Kitchen.

“This isn’t just a flash in the pan for Greggs either, it builds on strong performance last year, and demonstrates it’s still possible for bricks and mortar retailers to earn a crust on the UK high street. Last year total sales rose by 7.2%, and the baker opened around 100 net new outlets.

“Share price performance has also been strong, and has trebled in the last five years. A fair amount of growth is already baked into market expectations though, with Greggs trading at a fairly hefty 21 times earnings.”