Greggs brings home the bacon once more

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown:

“Greggs is bringing home the bacon again with our appetite for sausage rolls and sweet treats becoming insatiable once more.

The baker has returned to a first half pre-tax profit of £55.5 million, after very flaky pandemic sales, showing its recipe for recovery is paying off. It’s also paying an interim dividend for the first time since 2019.

Rolling lockdowns and the working from home revolution tore a big chunk off business as customers stayed away from its once bustling stores. It meant the company plunged to a £64.5 million pound loss during the same period last year. Greggs click and collect service was oven ready and just needed to be served up to all its stores. Its delivery service via Just Eat has also been on a roll since the start of the year. The strategy has been crucial for Greggs with office working once again pushed back for many past the summer. It has meant that appetite for lunchtime takeaways can be satisfied with a knock on the door instead, with delivery sales accounting for 8.5% of managed shop sales over the period.

Although like for like sales compared to the same period in 2019 are still down 9.2%, they are now heating up, with full year profits now forecast to be ahead of expectations.

In future more ovens will be firing up out of town and city centres, as the company shifts its focus to try and keep up with the change in working trends, which is likely to continue to be a headache for the company. It is opening 100 new outlets this year, but many will be in retail parks and in petrol forecourts where demand is strongest.

Keeping up with changing tastes, as health concerns rise will also be a challenge for a company famous for carb and sugar heavy treats. Expanding its meat free range is part of the strategy, with a vegan version of its sausage, bean and cheese melt likely to bring a little extra sauce to sales in the coming months.”

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