15th Sep 2014 07:39
LONDON (Alliance News) - UK bakery chain Greggs PLC Monday said it now expects full-year profits to be "materially ahead" of its previous expectations, following a strong sales performance in the third quarter, which saw own-shop like-for-like sales grow by 5.4%.
Greggs shares were up 14% at 610.00 pence per share in early trading Monday.
The company said the 5.4% growth in the 11 weeks to September 13, compared with a 1% decline last year, was buoyed by a strong trading performance and weaker comparatives.
Total sales grew by 4% year-on-year in the 11 week period, which includes store closures.
"This strong performance reflects a positive response from customers to new product initiatives, improved service, better value and our investment in shop refurbishments alongside more favourable trading conditions," said Chief Executive Roger White in a statement.
Greggs said that in the year-to-date, like-for-like sales are up 3.9%.
The company said its margins have continued to strengthen, reflecting on-going deflation in commodity costs, operational cost control and cost savings.
"Whilst we face tougher comparatives in the final quarter the combination of strong sales performance, lower costs, and our outlook for the remainder of the year means that we now anticipate full-year profits to be materially ahead of our previous expectation," said White.
Greggs did well during the financial crisis and economic downturn as sales of hot, inexpensive items such as sausage rolls and pasties did well, but it ran into trouble last year as sales slid and investments in its shops weighed on profits.
The company has been busy revamping, as it tries to build a bigger food-on-the-go business and capitalise on growing consumer demand for that sort of product, rather than its take-home bakery products.
The revamp continues to pay off, as the company has accelerated its store-closure programme, to shut down poor performing shops. It also has invested in shop refurbishment and increased its ranges and product offering. Greggs said its also has seen "more favourable trading conditions" than it had expected, as of late.
"In particular our new sandwich range with increased focus on our Balanced Choice options has been selling well. Upgrades to our coffee blend and to some of our core sweet lines have also driven increased sales," it said.
Greggs said it will continue rolling out new initiatives in the months ahead.
"In the year to date we have completed 153 shop refits and are encouraged by the results. We still expect to complete around 200 refits in the year as a whole. We have opened 32 new shops in the year to date and closed 43 poor performing units. We expect shop numbers for the year as a whole to be very slightly down," the company said.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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