Greggs (GRG said it has continued to trade well throughout its third quarter with two-year like-for-like sales up by 3.5% despite ongoing labour shortages and supply chain issues.
The British bakery chain expects its full year outcome to be ahead of previous expectations as it aims to double revenue to circa £2.4bn by 2026 across an estate of at least 3,000 shops.
Despite widely reported disruption to staffing and supply chains, Greggs said growth was particularly strong in August when a ‘staycation’ effect was evident and remained in positive territory in September, with two-year like-for-like growth of 3% in the four weeks to 2 October.
Delivery sales continued to progress and 943 shops are now involved in supplying customers.
In particular, the Group said the broadening of its vegan-friendly food and drink options has been well received, notably Gregg’s limited edition ‘Vegan Sausage, Bean & Cheeze Melt’ along with a ‘Vegan Ham & Cheeze Baguette’ and a vegan-friendly breakfast sausage.
Greggs acknowledged it had not been immune to the shortages and that food input inflation pressures are also increasing. It said it has short-term protection as a result of its forward buying positions but that it expects costs to increase towards the end of 2021 and into 2022.
In FY21 to date, Greggs has opened 84 new shops and closed 16 shops with 2,146 shops trading as at 2 October 2021 (1,785 company-managed shops and 361 franchised units).
In terms of estate growth, Greggs said it sees the potential for at least 3,000 UK shops and it is aiming to increase the rate of net shop number growth to 150 shops per year from 2022, of which around 50 per year are expected to be opened in partnership with franchisees.
In the short term, its target is that 500 of its shops will be open until 8pm by the end of 2022 after the Company recorded positive performance in the evening daypart sales during 3Q.
In addition, the Group said its new automated cold storage facility in Newcastle upon Tyne has commenced operations and ‘is performing well.’ Greggs believes this will create further capacity to support its growth ambitions whilst reducing logistics costs and carbon emissions.
Greggs said it is re-establishing the ordinary dividend policy and that it sees the potential for additional distributions in the near term and beyond the investment phase of its plans.
It concluded, ‘Operational cost control has been good and the strong sales performance in the third quarter gives us confidence as we move into the autumn. Subject to any unexpected COVID disruption we expect the full year outcome to be ahead of our previous expectations.’
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