3rd Oct 2023 09:48
(Alliance News) - Greggs PLC shares faced some selling pressure, as a decent trading report lacked a missing ingredient, and the decision to trim its store openings target also disappointed.
However, analysts believe the Newcastle-based firm has a promising outlook, with one even tipping it for FTSE 100 entry soon enough.
The bakery chain said it got a boost from its evening trading, sales made after 1600, and its digital channels in the 13 weeks to September 30. Total sales rose 21% on-year during the period. Company-managed shop like-for-like sales were up 14%.
"As we had expected, the rate of cost inflation has eased as we annualise on the significant commodity-led increases experienced in 2022. At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share. We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions," the company said.
Greggs expects a full-year outcome in line with expectations.
RBC Brewin Dolphin analyst John Moore commented: "Greggs' update is positive in what has become a business-as-usual way for the baker. Input inflation is beginning to ease and sales are growing, despite a challenging high-street environment. If anything, Greggs is proving it can be a beneficiary in tougher times, offering a price competitive option for lunch and, increasingly, evenings. The business has a strong balance sheet and is highly cash generative, which not only puts it in a good position to weather tough periods but also continue to deliver returns to shareholders.
"In its next set of results, the size of any increase to the dividend will be a good measure of the management team's confidence, as well as any indication of what its next big move will be. If it continues on its current roll, Greggs could find itself on the FTSE 100 in the next couple of years."
Edison analyst Russell Pointon said Greggs is in a "sweet spot in the retail market", benefitting from its strong strategy and cost management.
"Expanding its shop estate and investing in the supply chain further reinforce its market presence, albeit there may be some disappointment about the slightly lower than expected net new store growth for the full year, now targeting 135-145 stores versus 150 previously. While some economic uncertainties persist, Greggs' consistent delivery of strong results, along with its reputation for customer satisfaction and affordability, bodes well for its future," Pointon said.
Greggs shares fell 2.7% to 2,410.00 pence each in London on Tuesday morning.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Greggs