14 May 2024
GREGGS PLC
(“Greggs” or the “Company”)
TRADING UPDATE
Continued strategic and operational progress; building capacity for further growth in the UK
Highlights for the first 19 weeks of 2024
· 7.4% LFL* sales growth, with continued good progress across all channels
· 64 gross new shops opened, 27 net openings, 2,500 shops now trading
· Remain confident in 140-160 net shop openings for the full year
· No change in cost inflation expectations; 4-5% on a LFL basis
· Investments to increase supply chain capacity progressing well
· Board’s expectations for the full year outcome remain unchanged
* Like-for-like (LFL) company-managed shop sales performance against comparable period in 2023
Trading performance
Greggs performed well in the first 19 weeks of 2024 as we progressed our strategic growth plan. Like-for-like (LFL) sales in company-managed shops grew by 7.4%, with delivery sales, evening trade and increased participation in the Greggs App all supporting transaction volume growth. Total sales in the 19 weeks to 11 May 2024 were £693 million (2023: £609 million).
Our new over-ice drinks range including coffee, flavoured lemonades and coolers, currently available in 300 shops, is performing well and will be rolled out to up to 700 shops in the coming months. Pizza boxes have been in strong growth following a dedicated campaign and hot food continues to perform well, with our Southern Fried Chicken Goujons and Southern Fried Potato Wedges proving popular with customers. We also continue to extend our range of healthier choices, introducing the vegetarian Pesto and Mozzarella Pasta and Feta and Tomato Pasta, alongside our award-winning vegan Sweet Potato Bhaji and Rice salad bowl.
Shop estate and supply chain development
During the period we opened 64 new shops, including 15 with our franchise partners. Recent shop openings have included sites at Embankment underground station, four shops with Tesco and three with Sainsbury’s, the latter including two petrol filling station locations. In the year to date we have closed 37 shops (including 23 relocations), giving a total of 2,500 shops trading at 12 May (comprising 1,986 company-managed shops and 514 franchised units). The pipeline for the remainder of the year is strong, including a number of further opportunities with supermarket groups, and we remain confident in achieving 140-160 net openings for the full year.
In line with our previously-communicated capital expenditure plans the investment projects at our Birmingham and Amesbury distribution centres are progressing well and will deliver additional logistics capacity by the end of 2024. The fourth production line for our iconic savoury rolls and bakes at Balliol Park in Newcastle has now been commissioned, as planned, and will increase production capacity at the site by 35% over time.
In order to support the longer-term growth potential of the business we are, as previously communicated, progressing with the development of two new sites in the Midlands which are expected to be operational in late 2026 / early 2027:
– We have entered into an agreement for lease on a site at SmartParc SEGRO Derby for a facility that will be the focus of our increased manufacturing capacity needs whilst also supporting expansion of our logistics network capacity. The landlord is currently constructing the building, following which we will develop and install the first phase of manufacturing and logistics equipment through 2025 and 2026. In addition to the self-funded capital expenditure to install the equipment a leased right-of-use asset of circa £65 million will also be recognised on the commencement of the lease.
– We are progressing negotiations on the purchase of land in the Corby/Kettering area, where we will develop a National Distribution Centre for chilled and ambient goods. This site will significantly extend our logistics capacity across the network to circa 3,500 shops and deliver efficiencies through semi-automated storage and picking solutions. We aim to exchange contracts on the purchase of the land in the coming months.
Outlook
We have made a good start to the year with continued like-for-like growth in a challenging market, reflecting the strength of our strategic plan.
There has been no change to the outlook for cost inflation, which we expect to be in the range of 4-5% on a LFL basis.
Whilst early in the financial year, the Board’s expectations for the full year outcome are unchanged.