North East bakery giant Greggs sales up and profits on the back of extended evening trading and new shop openings.
Total sales at the Newcastle-based brand jumped to £844m in the first half of the year, up from £694.5m last year. Meanwhile operating profits excluding exceptional items increased to £63.7m, compared with £55.8m in the same period of 2022.
The Business Live news service is reporting that the food-on-the-go operator told the city it had ramped up the pace of new shop openings, launching 94 locations and closing 44 in the first half. It said the expansion meant it now ran 2,378 shops, including newly opened sites at Glasgow and Cardiff airports and London Gatwick Airport’s South Terminal, as well as Shepherds Bush and Canary Wharf Underground stations.
Greggs reiterated its goal of having “significantly more than 3,000” shops in its estate and said it was on track to deliver 150 net new openings this year, around a third of which will be with franchise partners. As part of its growth strategy, the retailer also has its eye on a bigger slice of the evening food market, and investors were told that post-4pm sales of its products such as pizza grew more strongly than any other part of the day, representing 8.3% of company-managed shop sales, up from 6.5% in the first half of 2022.
Elsewhere, Greggs also benefited from a £16.3m settlement of a Covid business interruption insurance claim, recognised after deduction of fees to advisors and £2.5m already accounted for in 2020. Cost inflation, particularly across food and packaging, still weighed on trading in the first half at around 11%, as the brand saw its underlying net pre-tax profit margin slip to 7.5% versus 8% in the first half of 2022.
Costs were expected to ease into the second half as inflation rises cooled with chief executive Roisin Currie telling journalists the firm predicted inflation to come down from 11% in the first half to around 7% in the second half. She said protecting Greggs’ value for customers was important and no price increases were planned this year.
Overall growth has put strain on Greggs’ supply chain which has spurred multimillion-pound investment in added manufacturing capacity for sausage rolls and bakes at its Balliol Park base in Newcastle, with a fourth production line due to open later this year. Work is also under way to redevelop its Birmingham distribution centre and extend its Amesbury location.
Ms Currie said: “Greggs strong performance continued in the first half of 2023 as we deliver on our strategic growth plan. With consumers remaining under pressure, we continue to offer exceptional value, which is reflected in our performance and growing market share.
“In the period we continued to open further new shops, extended trading hours into the evening and saw increased participation in the Greggs App. Our ambitious plans for growth are on track and our amazing teams are committed to realising the opportunity to become a significantly larger, multi-channel business.”
Greggs declared an interim dividend of 16p per share, up from 15p last year, which will be paid in October.