UK bakery chain Greggs said sales continued to beat its 2019 figures despite greater competition from dine-in venues that were able to reopen in May.
The company, popular for its sausage rolls and bakes, said on Monday that the strong recovery would have a “materially positive” impact on its full-year earnings this year.
Sales in its managed stores had increased in recent weeks by as much as 3 per cent compared with 2019 levels, it added.
Greggs last month announced that it expected profits to recover to pre-Covid levels as soon as this year even while commuters are not expected to return to offices in greater numbers until the autumn.
The positive updates follow a more cautious tone in March when Greggs reported its first full-year pre-tax loss since listing in 1984. It said then that it did not expect sales to return to pre-pandemic levels until 2022 at the earliest.
Food-to-go businesses such as Pret, Greggs and Leon have suffered a bruising year with lockdowns forcing them to rethink operating models and explore delivery and retail sales.
Roger Whiteside, Greggs’ chief executive, told the Financial Times last month that a more permanent shift to homeworking would not affect the company as much as some rivals because it was not solely reliant on the white collar commuter market.
“Unlike some others, we haven’t specialised in particular market locations or particular customer types. Ours is a very broad-based business model with broad, widely varied range of locations and a widely varied range of customers,” he said.
Greggs has, in recent months, restarted its store opening programme with plans to open six more sites within central London.
Clive Black, an analyst at Shore Capital, said that Greggs had "bounced back exceptionally well" and that he expected further profit upgrades as the group managed the expectations of investors.
But, he warned, the company had yet to face “full reopening competition”, likely from July 19 when all restrictions should ease, and increased business rates in its next full financial year.
Greggs’ shares in early London trading added almost 3 per cent, bringing its year-to-date gains to about 47 per cent, before settling back to trade flat.
“We had expected to see increased competition as cafés and restaurants were allowed to compete more effectively with our largely take-out offer,” the group said in reference to the weeks after its May update.
Like-for-like sales ranged between 1 and 3 per cent up on the same period in 2019, it said.
“This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year,” it concluded. – Copyright The Financial Times Limited 2021
