Greggs has reported good trading in the third quarter, delivering increased sales while controlling costs. In the 13 weeks to 3 October 2015 like-for-like sales in shops grew by 4.9 per cent against strong comparatives, slightly ahead of expectations. In the year to date like-for-like sales have increased by 5.6 per cent. Total sales grew by 5.0 per cent in the 13 weeks and have grown by 5.1 per cent in the year to date.
Product initiatives across the day combined with great value deals continue to drive increased customer visits and transaction values. The extension of the Balanced Choice range to include improved own-label drinks with no added sugar has proved popular with customers. With colder weather approaching, the hot food menu has been relaunched with a range of delicious soups and hot sandwiches. New additions to the menu include the Mildly Spiced Chicken Curry Soup and Peri Peri Chicken Flatbread, both of which are part of the Balanced Choice range. Other additions to the hot menu include the Aberdeen Angus Spicy Meatball Melt Baguette. The seasonal range for Halloween is back in shops, including the popular Bat Biscuit and Spooky Ring Bun.
Highlights
- Own shop like-for-like sales up 4.9% for the 13 weeks to 3 October (2014: 5.2%)
- 158 refits completed year to date, 20 conversions of larger bakery cafés
- 65 new shops opened year to date, 47 closures
- Balanced Choice and hot food options proving popular
- Low inflation environment continues
- Expansion of partnership with Euro Garages
- Acquisition of distribution centre to support growth plans
Outlook
Market conditions remain favourable with low cost pressures and a stronger consumer environment. This is expected to continue through to the end of the year after which increases to wage rates will drive greater inflationary pressure. Greggs’ standard rate for hourly-paid shop staff is already above the National Minimum Wage and Greggs will maintain a competitive position in the market going forward.
Sales performance is slightly ahead of the previous plan and, whilst comparatives will stiffen further in the fourth quarter, sales will benefit from additional shop openings. As a result, Greggs expects to deliver good growth for the year, slightly ahead of previous expectations, and further progress against the strategic plan.
Shop estate development
In the year to date, 158 shop refurbishments have been completed and around 200 shops will be completed this year. In addition, 20 of the larger bakery cafés have been converted to the “bakery food-on-the-go” format. This investment in refurbishing the estate continues to provide a good capital return and is transforming the quality of the shopping environment for customers.
65 new shops have now been opened in 2015, including 35 franchised units predominantly in transport locations. 47 shops have been closed, giving a total of 1,668 shops trading at 6 October (comprising 1,588 own shops and 80 franchised units).
Work with franchise partners is extending the Greggs offer to previously inaccessible locations, particularly transport sites. The relationship with Euro Garages Limited has so far led to the development of Greggs outlets in 30 of their forecourt sites, which will now be extended this to a further 27 sites that are undergoing refurbishment in the fourth quarter.