4th Oct 2022 13:46
(Alliance News) - Greggs PLC's "robust" third quarter results demonstrate its continually impressive resilience, analysts at Jeffries said on Tuesday.
The Newcastle-based food-seller reported that for the 13 weeks to October 1, total sales were up 15%.
Company-managed shop like-for-like sales were up 9.7%. Greggs added that the closure of its shops on September 19 for Her Majesty The Queen's funeral had impacted like-for-like sales growth by around one percentage point.
Analysts at Edison Group said that the company's successful adaptation of its menu to meet consumer needs was crucial to its competitiveness.
They also highlighted the company's continued expansion into the drive-through market, which makes up over 5% of consumer spending outside of the home in the UK.
Greggs intends to lengthen its trading day in the next quarter in order to increase sales.
"Whilst not sceptical as to its plans, we observe with interest to see how its assortment evolves to compete in the evening trade where there is a different meal occasion and also competitor set," commented analysts Shore Capital Market.
Looking to the fourth quarter, commentators were confident that the baker' strong balance sheet puts it in a good position.
However, there was a general nervousness around trading for next financial year, specifically relating to how margins may succumb to currency effects, energy, labour and interest rates, as the UK's economic outlook worsens.
"Investors will undoubtedly keep a close eye on how consumers adapt in the coming months as inflation drives up prices and squeezes household budgets," Edison analysts added.
Broker Peel Hunt has a 'hold' for Greggs, at a target price of 2,500.00 pence. It took confidence from the company's trading update.
"The shape was as we have heard from other retailers; August was tougher against the tricky staycation comp with arguably less people physically in the country. September, however, has returned to better growth," analysts at Peel said.
Shore Capital is of a similar mind, recommending "a solid" 'hold'.
Greggs shares were trading 9.8% higher at 1,892.00p each in London on Tuesday afternoon.
By Holly Beveridge; [email protected]
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