Shares in Greggs jumped 12% on Tuesday after investors were cheered by the news that profits in 2018 would be stronger than previously expected thanks to bumper sales in October and November.
The bakery chain was the top FTSE 250 riser after reporting a 9% increase in sales in the eight weeks to 24 November. As well as offering its traditional favourites such as sausage rolls and pasties, Greggs customers can now indulge in the chain’s Christmas range, including its festive bake, its turkey, bacon and cranberry roll, and its mince pies.
Greggs said that after the stronger sales it was now expecting full-year pretax profits of at least £86m in 2018, having previously expected profits to be roughly in line with the £81.8m achieved in 2017.
Investors welcomed the strong performance, which bucks the broader trend on Britain’s high streets as retailers struggle with higher costs and changing shopping habits as consumers buy more online.
The company said in a statement: “This stronger trading in October and November is particularly encouraging as it builds on good comparative sales in the same period last year.
“Operational costs have been well controlled and, whilst there is still much to play for over the final few weeks of the year, the board now anticipate that full-year underlying profit before tax (excluding exceptional charges) will be at least £86m.”
As well as a 9% rise in total sales, on a like-for-like basis – stripping out sales in shops open for less than a year – revenues increased by 4.5%.
Russ Mould, the investment director at AJ Bell, said Greggs had benefited from adapting its business to better meet consumer demands and habits by offering different products and opening shops in travel locations such as railway stations and airports.
He said: “The company has an excellent dividend track record and has not stood still, pivoting from its focus on traditional baking to a broader cheap-food-on-the-go option in recent years.
“Greggs has also been busily reducing its dependence on the high street by opening new outlets in locations which capture work, travel or leisure-related footfall.
“Though Greggs is not unaffected by what is happening in the consumer backdrop, its attractive prices should provide some resilience against economic uncertainty.”
