The launch of Autumn ranges including a pumpkin spiced doughnut and a Mexican bean and spicy cheese flatbread as the nights start to draw in has helped sales at Greggs pick up pace in September after a summer lull.
Like for like sales growth slowed to 5% in the third quarter to 28 September compared with a 6.5% annual run rate for the financial year to date. Shares slumped about 4% on the back of news of the slower sales.
Chief executive Roisin Currie said softer consumer confidence and uncertainty in the run up to the election combined with soggy early summer weather may have been responsible. September was the strongest month in the quarter.
Total sales were up 10.6% over the 13 week period compared with 12.7% for the year to date, Greggs said in a trading update.
Currie said the company was on track to open between 140 and 160 net new shops in 2024, including around 50 relocations bringing the total trading estate to 2,559 at 28 September 2024. The extension of a distribution centre at Amesbury in Wiltshire has added logistics capacity to support a further 300 shops in the southern network.
Another solid Q3 update with sales growth driven by new space, menu extension, higher evening sales, home delivery, and digital participation. September was the strongest month of the quarter with trading on track to meet FY consensus expectations.”
She also said cost inflation for the year is now expected to be at the lower end of the 4% to 5% range previously estimated thanks to fully hedged energy costs and forward buying of food.
The company said: “Whilst acknowledging ongoing economic uncertainty, the Board expects the full year outcome to be in line with its previous expectations. The Board remains confident in the long-term growth opportunity for Greggs, and we are investing to support that growth.”
Kate Calvert, analyst at Investec Securities said in a note: “Another solid Q3 update with sales growth driven by new space, menu extension, higher evening sales, home delivery, and digital participation. September was the strongest month of the quarter with trading on track to meet FY consensus expectations.”
Mamta Valechha, retail equity analyst at Quilter Cheviot, said:"Another robust trading update from Greggs this morning. For the third quarter ended September, total sales were up 10.6% and up 5% on a like-for-like basis. While this is softer than the 7% run rate we saw in the first half, reflecting a relatively soft July and August, Greggs mentioned that September was its strongest month, suggesting an acceleration into Q4. This growth is being driven by new menu developments, extended trading hours, and progress in its digital channels.
He added: “There is significant growth potential in London and south-east England, and Greggs remains second only to McDonald’s in monthly active app users."
