Strong sales of mince pies and its Festive Bake have helped boost profit expectations at food-to-go business Greggs.
Like-for-like sales in its company-managed shops were up 5.2% in the last quarter, with total sales in the full year up 7.2%, Greggs reported today (9 January) in a trading update for the 52 weeks ended 29 December 2018.
The performance has prompted the business - which in May last year warned profits would be impacted by costs - to raise its expected 2018 profits from £86m to £88m. Greggs is due to announce its preliminary results for 2018 on 7 March 2019.
In addition to good sales of festive products, the company reported further growth in categories such as hot drinks and breakfast. Greggs said investment in systems and staff training had boosted operational performance.
During the year it opened 149 new shops (including 62 franchised sites) and closed 50, growing the estate to 1,953 at 29 December, 262 of which are franchised. Greggs plans to open between 90 and 100 sites in the year ahead.
New product development has included the vegan-friendly sausage roll launched last week and a vegan-friendly winter vegetable soup in a meal deal for £2.25.
“We delivered a very strong finish to 2018 despite the well-publicised challenges in the consumer sector. This performance was broad-based, reflecting the strength of our range of freshly prepared food and drinks, and the strategic changes that we have made in recent years to focus more effectively on the food-on-the-go market,” said chief executive Roger Whiteside.
“In the year ahead, we will continue to innovate with products designed to reflect changing consumer tastes, and by opening in new locations that make Greggs even more accessible to customers.”
Fiona Cincotta, senior market analyst at www.cityindex.co.uk, said the profit warning issued by Greggs in May “seems like a distant memory now that Greggs has made a surprisingly strong finish to 2018”.
“More sales volatility can’t be ruled out in future, though the company appears to be on a stronger footing now than it was heading into last year,” she added. “Previous investments in manufacturing capabilities and administration systems, meanwhile, are set to bear fruit over the coming months via efficiency gains.”