British bakery chain Greggs defied the gloomy hospitality industry with sales up 15 per cent in the most recent quarter, despite a string of price hikes over the past year.
Compared to the same period last year, the group recorded a 14.7 percent increase in total sales and a 9.7 percent increase in like-for-like sales. The share price rose nearly 10 percent to £18.92 in London early this afternoon.
The strong performance came as the retailer pushed through price increases of between 5p and 10p across its range. Store closures on the day of the Queen’s state funeral in September also sapped sales growth by 1 percentage point, the company said.
The best-selling Greggs sausage roll is now £1.15, up from £1.10 when the last price increase was introduced in May. In December last year, before the series of price increases, it cost just £1. Total cost inflation for 2022 is around 9 percent, the retailer said.
Greggs chief executive Roisin Currie said it was “really gratifying” that the business continued to trade strongly.
She attributed part of the company’s success to having less expensive items than the competition, making it easier to attract customers looking for affordable food and drink at a time when many are on tight incomes and high inflation have to fight. “We are working really hard to ensure customers can continue to benefit from us.”
She added that she hopes Greggs can win new business as consumers trade down to beat rising prices.
“We’re a values-driven company, so it’s times like this when we just make sure that customers who may not know Greggs or don’t come to us very often that we can encourage them to come more to us,” she said.
Julie Palmer, partner at Begbies Traynor, said the trading update suggested Greggs could be a “close winner” during the cost of living crisis, “as customers look to switch to the more affordable menu during these trying times.”
Greggs said it has opened 106 stores so far this year and aims to add 150 stores to its inventory by the end of the year. It currently has 2,271 stores.
It also said it had signed new forward purchase agreements to cover energy and food supplies for the fourth quarter. It expects its energy price protection will keep costs below the government’s energy price cap of £211 per MWh for electricity and £75 per MWh for gas.
https://www.ft.com/content/10198de7-7553-4444-b57f-8d0cbc6e269b Despite price increases, Greggs is defying the slowdown with sales growth