Greggs on a Roll
Greggs, the UK bakery and food manufacturer and retailer, has delivered an exceptional first-half performance, with total sales for the 26 weeks to 29 June 2019 up by 14.7% to £546 million, as like-for-like sales in company-managed shops rose by 10.5% compared with the first half of 2018, when trading conditions were more challenging. Underlying pre-tax profit excluding property gains and exceptional charges was £40.6 million in the first half of 2019 (against £25.7 million in 2018), giving an underlying net margin of 7.4% (2018 – 5.4%).
Greggs is benefiting from strong growth in customer visits as its broadens its appeal for food-on-the-go combined with the continuing popularity of its traditional bakery favourites selling well alongside growth in Fairtrade coffee, breakfast and new hot food options, such as the new vegan-friendly sausage roll.
Greggs has continued to make strategic progress with its programmes of investment in infrastructure to support future growth and in developing the products and channels to market that will help achieve the group's ambition to be the customer's favourite for food-on-the-go.
Capital expenditure during the first half was £33.2 million (2018 – £33.2 million) as Greggs continued to invest in the transformation of its manufacturing and logistics capacity whilst also growing the company-managed estate. In light of the strong trading performance Greggs has brought forward existing plans to reinvest in its Balliol Park manufacturing and logistics site. As a result of this, along with some further contingency planning ahead of the UK's possible exit from the European Union, Greggs now expects total capital expenditure in 2019 to be in the range £90-100 million (2018 – £73.0 million). This is purely a change in the phasing of investments and the medium-term outlook for capital expenditure remains unchanged.
Roger Whiteside (pictured), chief executive of Greggs, comments: "Given the strength of our year to date and the outlook, we have decided to increase investment in strategic initiatives in the second half of the year to help to deliver an even stronger customer proposition and further growth in the years ahead. Our expectations for underlying profits for the year as a whole remain unchanged."
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