5th Oct 2021 08:10
(Alliance News) - Greggs PLC on Tuesday said it is not immune to supply chain issues, but the baker and retailer lifted guidance, optimistically set a target to double revenue over the next five years and said it is in the process of re-establishing dividend payments.
The sausage roll maker, a common fixture on UK high streets, said it has faced staffing and supply chain problems. However, like-for-like sales in its third quarter ended October 2 were 3.5% higher than they were two years earlier, so before the onset of the pandemic.
A boost in staycations contributed to a "particularly strong" August. Like-for-likes sales also remained in positive territory in September.
"Greggs has not been immune to the well-publicised pressures on staffing and supply chains, and we have seen some disruption to the availability of labour and supply of ingredients and products in recent months," said Greggs.
"Food input inflation pressures are also increasing; whilst we have short-term protection as a result of our forward buying positions, we expect costs to increase towards the end of 2021 and into 2022."
Nonetheless, it said its strong performance in the third quarter lends confidence for the full-year, and Gregg expects its annual result to be ahead of previous internal expectations.
It also noted a new cold storage facility in Newcastle is operational, offering more capacity and reducing logistics costs. Greggs is based in Newcastle upon Tyne.
Greggs is on Tuesday hosting a capital markets day, in which it will unveil plans for 500 of its shops to be open until 8pm by the end of next year as part of a bid to double revenue to around GBP2.4 billion by 2026.
Back in March, it said revenue in the year that ended January 2, 2021 amounted to GBP811.3 million. It estimates revenue of GBP1.20 billion this year.
Greggs is targetting 100 net new openings in 2021, the figure stands at 68 to date. It expects 150 net new openings per year from 2022, noting the potential for at least 3,000 shops. According to its website, it currently has over 2,000 stores.
Its delivery offering is also picking up, with 943 stores now providing the service.
"Our success in recent years has enabled us to achieve a 5% share of the food-on-the go market, despite offering our services primarily in the walk-in channel and limited to daytime opening hours. As we scale Greggs to become a fully-fledged, multi-channel, food-on-the-go brand for all times of the day we have developed an ambitious target to double revenue to circa GBP2.4 billion by 2026," the company said.
At the moment, Greggs only has plans for the UK, though it did not rule out an international expansion further down the line.
"We are conducting some very early analysis to help better understand the possible opportunity," the company said.
In addition, Greggs said it is in the process of re-establishing an ordinary dividend policy and sees potential for additional distributions in the near term, the company explained.
Greggs shares were 3.8% higher at 2,982.40 pence each in London on Tuesday morning.
By Eric Cunha; [email protected]
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