Greggs full-year sales surpass pre-Covid levels as analysts caution price rises
Greggs full-year sales have surpassed pre-pandemic levels, as the bakery chain restarts its colleague profit-sharing scheme, which will see £16.6m shared with staff.
Total sales rose 5.3 per cent to £1.2bn, in comparison with 2019’s figure of £1.1bn, preliminary results for the year to 1 January revealed this morning.
It comes as the bakery chain rewards shareholders with a special dividend of 40p per share, after a turbulent two years, punctuated with several lockdown closures.
Greggs opened 103 new shops in the period, taking its total stores to 2,181, following 28 bakery closures. The bakery outlined plans to grow its bakery network to 3,000 “over time”, as it sets a new target of 150 store openings each year.
However, spiralling energy costs amid rising inflation may hinder Greggs’ growth plans, as chief executive Roger Whiteside warned that cost pressures are “currently more significant than our initial expectations”.
“We will work to mitigate the impact of this on customers, however given this dynamic we do not currently expect material profit progression in the year ahead,” he said in a statement today.
“Despite these near-term pressures, we continue to believe that the opportunities for Greggs have never been more exciting. Our investment over recent years has left the business well-placed to move quickly as the economy recovers and we drive our ambitious plans to become a larger, multi-channel business.”
The business has benefited from the easing of lockdown restrictions in the UK and the return of footfall, senior investment manager at Brewin Dolphin John Moore explained.
However, “the question, as alluded to in today’s statement, is how the business reacts to cost inflation being ahead of its expectations”, Moore added. “Greggs has a tricky balancing act to perform on that front, at least in the short to medium term. But the company is well-known for its long-term thinking, which has worked well for it in the past.”
Edison Group director Russell Pointon also cautioned that future price increases are more likely considering cost inflation on raw materials, energy and people.