The UK’s leading food-on-the-go retailer, Greggs, has shared a trading update for the first 19 weeks of 2023 which saw like for-like sales rise by 17.1% and no change to the inflation outlook, with costs expected to rise by c. 9% this year. Despite this “considerable uncertainty” in the economy, however, 2023s full year expectations remail unchanged.
Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented:
“This is a solid performance from Greggs in a challenging economic environment, with little sign so far of consumers cutting back on sausage rolls and pasties.
The cost of raw materials, energy and wages are all rising rapidly and Greggs is significantly exposed to all three. However, at least inflation appears to have stabilised and isn’t getting worse. And crucially, sales are rising strongly, which is providing oxygen to help absorb cost pressures.
Some of that sales growth is explained by lapping the impact of Omnicron in the first nine weeks of last year. Even so, there is no doubt Greggs’ brand is resonating strongly with the UK consumer and is in fine fettle.
Inflationary pressures will continue to bite in the rest of the year, holding back profits. However, Greggs is in a far better position than most retailers to weather the storm, and is more than holding its own. Should inflation start to moderate, the business looks well primed to return to profit growth.”