Greggs, the leading bakery food-on-the-go retailer in the UK with almost 1,700 retail outlets, has reported strong performance for the 11 weeks to 13 September in its Interim Management Statement:
- Own shop like-for-like sales up 5.4% for the 11 weeks to 13 September (2013: 1.0% decline)
- Year to date own shop like-for-like sales up 3.9%
- Total sales growth 3.5% year to date (2013: 3.4%)
- 153 refits completed
- 32 new shops opened, 43 closures
- Further margin benefits from commodity deflation
- Excellent cost control
- Faster progress with structural efficiency initiatives
Full year profits to be materially ahead
Chief Executive Roger Whiteside comments:
“This strong performance reflects a positive response from customers to new product initiatives, improved service, better value and our investment in shop refurbishments alongside more favourable trading conditions.
“Whilst we face tougher comparatives in the final quarter the combination of strong sales performance, lower costs and our outlook for the remainder of the year means that we now anticipate full year profits to be materially ahead of our previous expectation.”
Sales
Like-for-like sales grew by 5.4 per cent in the 11 week period to 13 September 2014 (2013: 1.0 per cent decline) continuing the strong performance reported at the time of the interim results announcement and reflecting the benefit of the weaker comparative period last year. In the year to date like-for-like sales have now increased by 3.9 per cent. Total sales grew by 4.0 per cent year-on-year in the 11 weeks, including the impact of the accelerated closure programme for poor performing shops.
This strong performance reflects a positive response from customers to new product initiatives, improved service, better value and investment in shop refurbishments alongside more favourable trading conditions than expected. In particular the new sandwich range with increased focus on the Balanced Choice options has been selling well. Upgrades to the coffee blend and to some of the core sweet lines have also driven increased sales.
Shop estate
In the year to date 153 shop refits completed, with encouraging results. Around 200 refits expected to be completed in the year as a whole.
32 new shops opened in the year to date and 43 poor performing units closed. As at 13 September 2014, have a total of 1660 shops, including 42 franchised operations.
Summary and outlook
Margins have continued to strengthen into the second half, reflecting on-going deflation in commodity costs, excellent operational cost control and delivery of structural cost savings ahead of plan. Looking forward, Greggs expect the input cost environment to remain benign in the near term and plan to continue making good operational progress.
Sales-driving initiatives have been delivered in more favourable trading conditions than expected with no adverse weather impacts so far this year. Greggs expect to continue rolling out new initiatives, in line with strategy, in the months ahead
Whilst Greggs faces tougher comparatives in the final quarter, the combination of strong sales performance, lower costs and the outlook for the remainder of the year means that full year profits are now anticipated to be materially ahead of the previous expectation.
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