13th Jan 2015 10:36
LONDON (Alliance News) - Shares in Greggs PLC rose sharply Tuesday after the bakery chain upgraded its expectations for its full year results for the second time in as many months on the back of a rise in sales over the full year and a boost from a strong Christmas trading period.
Shares in the company rose 6.6% to 798.6 pence, making it the best performing stock in the FTSE 250 in mid-morning trade. It was promoted to the mid-cap index at the last quarterly index review which took effect late last month.
Greggs said total sales for the 53 weeks to January 3 are expected to be up 5.5%, with own-shop like-for-like sales expected to increase 4.5%. The rise in sales includes an extra trading week compared with the year before.
Fourth quarter own-shop like-for-like sales rose 6%, it said, boosted by an 8.2% rise in the five weeks to January 3. That compares to a 3.1% rise for the comparable period a year earlier.
Greggs said it expects its results to be ahead of its expectations for the full year and said conditions for the first half of 2015 were strong, with low input-cost inflation and an improved outlook for its disposable income.
The upgrade to its expectations comes on the heels of its trading update in mid-December, when it said it expects its full-year profits to beat market expectations on the back of stronger-than-anticipated like-for-like sales growth.
The group opened 50 new shops in 2014, including 20 franchised units, and increased its number of shop closures to 71. It also completed 213 shop refurbishments over the year.
Greggs attributed the strong performance to consumer demand for its 'food-on-the-go'-focused product range, particularly over the Christmas period when it recorded strong sales of sandwiches, sausage rolls and coffee. It added sales of its 'Balanced Choice' low-calorie range has continued to grow and said new products, including its fresh soups and steak and cheese rolls received a positive reception from customers.
"Since our last update on December 15, we have experienced a very strong level of trade through the Christmas and New Year period. Customers have clearly responded to the improvements in our product offer and service, designed to meet the needs of the food-on-the-go consumer, during this busy period," said Chief Executive Roger Whiteside.
"This has been a year in which we have made good progress with our strategic plans and seen a welcome improvement in financial performance. We remain clear on our priorities and are confident that we can make further progress in the year ahead," Whiteside added.
Shore Capital gave a thumbs up to the trading update, noting the like-for-like sales growth of 4.5% for the year was ahead of its forecast of 4.2%.
The broker reiterated its Buy rating on the stock and said it expects to upgrade its estimates for 2015 to be at least in line with those for 2014.
By Sam Unsted; [email protected]; @SamUAtAlliance
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