Greggs takes a slice of austerity profits

Sales are on the rise at high street baker Greggs. Does it have the downturn recipe down?

by Dave Waller
Last Updated: 06 Nov 2012
Like-for-like sales at Greggs were up 0.8% in the 13 weeks to October 1. That compares with a rise of 0.4% in the first-half of the year, leaving the company forecasting ‘marginally positive’ like-for-like sales growth for the full year. Now that’s hardly the most bullish of predictions, but it’s better than having your sausage roll squashed by stagnation. 

Total sales rose 5.4%, after it opened 53 new stores in the year to date and successfully rolled out breakfast promotions. The firm said it was on track for a record 80 new openings this year. It also apparently sold more than 1.4m of its new Superstar Doughnuts, which is clearly good for its balance sheet - if not for the nation’s stated quest to avoid turning obese.

Greggs serves around 6m customers a week from 1,540 shops – that’s more than the number of McDonalds branches in the country. While other retailers may be suffering the squeeze, Greggs is relatively cheap, so it’s doing ok out of people shifting down to cheaper nibbles. For the price of a coffee from one of the big chains, for example, its punters can breakfast on coffee plus bacon or sausage roll. And its network of 10 regional bakeries supplying numerous stores is cost-effective and flexible. If you’re going to be dependent on people’s disposable incomes, that’s where you want to be.

And Greggs isn’t the only baker with a positive story today: clothing brand Ted Baker has also done well, posting strong first-half results led by growth in its overseas and online businesses. For the 28 weeks ended August 13, pre-tax profit hit £8.5m – up from £7.5m last year. Yet despite revenue rising 17% to 102.8m, it too is remaining cautious, because of the less than smooth territory ahead. If Greggs’ future may get flakier, so Ted could find the buttons being ripped off its profits…

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