Greggs has delivered an “exceptional trading performance” in the first half of 2019, off the back of the popularity of its vegan sausage roll, and building on a successful end to 2018.
The food-to-go retailer achieved like-for-like sales growth 10.5%, and total sales up 14.7% to £546m.
Underlying pre-tax profit excluding exceptional items was £40.6m – up from £25.7m in H1 2018 – and with a margin of 7.5%.
Greggs said the strong growth in customers comes as it broadens its appeal for food-on-the-go
Traditional bakery favourites are selling well alongside growth in Fairtrade coffee, breakfast and new hot food options
During the 26 weeks to 29 June 2019, Greggs opened 54 new shops, closed 23, and is on track to have around 100 net new shops for the year as a whole. Over all it has 1,984 shops trading, of which 275 are franchise units.
Extended trials in new channels including ‘click & collect’ and delivery
Roger Whiteside, chief executive, said: “Greggs has delivered an exceptional first half performance, building on the strong finish to 2018. We have continued to make strategic progress with our programmes of investment in infrastructure to support future growth and in developing the products and channels to market that will help achieve our ambition to be the customers’ favourite for food-on-the-go.
“Given the strength of our year to date and the outlook, we have decided to increase investment in strategic initiatives in the second half of the year to help to deliver an even stronger customer proposition and further growth in the years ahead. Our expectations for underlying profits for the year as a whole remain unchanged.”
Whiteside initial demand for its now famous vegan-friendly sausage roll “significantly outstripped our expectations”, with the product now one of Greggs’ top sellers.
Breakfast remains the fastest-growing daypart, with sales of coffee now placing Greggs third in the UK out-of-home coffee market.
Hot food cabinets are being rolled out to include fresh porridge and hot breakfast.
Pizzas are growing in popularity later in the day, with trials of extended late opening hours to follow in the autumn.
With a fourth drive-through opening in Newcastle, travel hub locations such as railway stations, road and motorway services, and airports are being sought.
Out of 100 net openings in the year as a whole, 40 are exected to be with franchise partners.
The ‘click & collect’ pilot has been extended to seven cities, with an extended trial of delivery options to include Just Eat alongside Deliveroo.
“Substantial progress” has been made in the construction of a centre based at Amesbury in Wiltshire, with further investments to made in Treforest in South Wales and storage site Balliol Park in Newcastle.
An exceptional charge of £4m was incurred as a result of this investment programme in manufacturing and distribution, with exceptional costs for the full year expected to be £6-7m.
Capital expenditure was £33.2m, with plans brought forward to reinvest in Balliol Park.
As a result of this, along with further contingency planning ahead of the UK’s possible exit from the EU, total capital expenditure in 2019 is expected be around £90-100m.
Greggs expects the rate of like-for-like growth will begin to normalise “as we face stronger comparative numbers in the second half of the year”.
Higher food costs are expected in the balance of the year, resulting in overall cost inflation being at the higher end of our expectations.
Stocks of key ingredients and equipment that could be affected by a disorderly exit from the EU are being built.
Greggs hails vegan sausage roll for ‘exceptional’ H1 trading
Greggs has delivered an “exceptional trading performance” in the first half of 2019, off the back of the popularity of its vegan sausage roll, and following a successful end to 2018. The food-to-go retailer achieved like-for-like sales growth of 10.5%, while total sales were up 14.7% to £546m. Underlying pre-tax profit excluding exceptional items was £40.6m – up from £25.7m in H1 2018. Greggs, which has nearly 2,000 shops, is on track to open a net new 100 stores this year, with travel hubs being sought.