Greggs shares jump after bumper year for sales

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Greggs shares jumped 9 per cent on Wednesday after the food-to-go retailer reported strong sales growth and announced plans to open up to 160 additional stores this year.

Total sales for 2023 rose 19.6 per cent compared with the previous year to £1.8bn, with shop like-for-like sales up 13.7 per cent.

The Newcastle-based purveyor of hot and cold bakery products said sales had been driven by consistent volume growth and boosted by “greater availability through digital channels” such as Uber Eats, but that the contribution of price inflation to revenue growth had slowed throughout the year.

Falling price inflation contributed to fourth-quarter like-for-like sales growth across its own-managed shops slowing to 9.4 per cent, compared with 13.7 per cent in the previous three months.

“Inflationary pressures are reducing and with good forward cover on food, packaging and energy we anticipate a more stable cost base in the coming year,” said Greggs.

It added that while “wage inflation remains . . . higher rates of pay across the economy will also provide support to consumer incomes”.

Roisin Currie, chief executive, said: “It is an inflationary environment, not a deflationary environment, and that’s pretty much driven by the wage inflation . . . that’s just under 10 per cent, and 40 per cent of our costs are wages.”

Ben Hunt, a retail analyst at Investec, described the results as “a solid performance and a touch ahead of our expectations”, citing Greggs’s competitive pricing compared with its peers as well as the benefit to sales of extended store opening hours, its app and product range innovation.

For 2024, Hunt said: “I expect like-for-like sales to benefit from the gentle burn coming from the extension of store opening hours — which should also provide decent margin tailwinds as well given that you’re adding incremental sales to existing stores.”

Greggs opened a record 220 new shops last year, with 33 closures and 42 relocations. The group now has 2,473 shops trading.

“We enter 2024 with plans to continue to invest in our shops and expand supply chain capacity to deliver the growth strategy, supported by our strong balance sheet,” said Currie, adding that Greggs believed it could reach “significantly more than 3,000 shops”.