Solid results from Greggs, but pressure on trading to come
Interim results from Greggs, the UK bakery retailer, show sales are up 2.9%, with like-for-like sales rising 0.7%. Pre-tax profit was up 12.3% to £18.5m.
This is a solid set of results from a company that knows its business and despite the downturn, has stuck with its investment plans. Its stores are continuing to be refitted and new outlets have been opened. And this investment is paying off. Greggs now has over 1,437 sites in the UK, serving over six million customers each week.
Acknowledging that consumers now have far less money to spend, the company has also focused its promotions on value offers such as meal deals and breakfast promotions. All sensible stuff.
But Greggs acknowledges that there will be further inflationary pressures coming to bear over the next six months, including a rise in the cost of wheat and other basic raw materials. As foodservice and food retail operators will find it difficult to raise prices to maintain their margins, there's likely to be a hit on the bottom line for the sector as a whole.
Peter Backman
Managing Director
Horizons