29th Jul 2015 13:44
LONDON (Alliance News) - Greggs PLC on Wednesday reported a big rise in profit in the first half of 2015 and said it is confident it will deliver a good year of growth ahead of its previous expectations.
Shares in Greggs were trading up 6.4% at 1,260.00 pence on Wednesday afternoon, the fourth best performer in the FTSE 250 and a new 52-week high.
The bakery and food-to-go retailer reported a jump in pretax profit in the 26 weeks to July 4 to GBP25.6 million from GBP8.6 million, as revenue grew to GBP398.4 million from GBP374.4 million, and like-for-like sales grew 5.9%. It said that revenue was boosted by an improvement in its products and due to investments it made into its shop estate.
Profit had also been hit the year before by exceptional costs of GBP8.3 million.
Greggs said that growth in average transaction value and customer visits were boosted by the extension of its Balanced Choice range and its breakfast menu. All its food-to-go categories delivered like-for-like growth, with sandwiches in particular benefiting from the range relaunch in June last year, it said.
Under its shop refurbishment programme Greggs completed 118 store refits and 12 cafe conversions and plans to update 200 to 220 shops during the year. It also returned to net shop growth with 44 new shop openings and 30 closures, taking the total number of shops to 1,664 at July 4.
Prior year restructuring of in-store bakeries and support operations contributed to a GBP2.4 million cost reduction year-on-year, Greggs said, adding that a further GBP0.6 million saving is expected to occur in the second half of the year.
Other ongoing structural cost reductions are progressing well, and Greggs said it is on track to save GBP5 million to GBP6 million in the year as a whole.
Greggs will pay an interim dividend of 7.4 pence, up from the 6.0p it paid the year before.
"We have had a strong first half with good growth in sales reflecting improvements in our products and the reaction to our shop investment programme. Our offer of great tasting food-on-the-go is being well received by the consumer in market conditions that have remained favourable. In particular we have seen significant growth in breakfast sales as well as from the extension of our 'Balanced Choice' range of sandwiches and flatbreads with fewer than 400 calories," Chief Executive Roger Whiteside said in a statement.
"With the shop refurbishment programme continuing to progress well and new additions to the product range including pizza slices, we are confident of delivering a year of good growth slightly ahead of our previous expectations," he added.
Analysts were encouraged by Greggs' results, saying that they were stronger than anticipated.
"Newcastle-upon-Tyne should be toasting or is that sausage rolling Greggs after another impressive update that represents a beat of our expectations at half-time in the current financial year and leads us to outline our expectation of further upgrades to our forecasts for group profitability," Shore Capital said.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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