Greggs’ Sales Soared 17.8% In 2022. Here’s What The Analysts Say

Sausage roll seller Greggs rose fractionally on Thursday after announcing robust Christmas and full-year sales growth.

At £24.52 per share the British bakery chain was last trading 0.4% higher from Wednesday’s close.

Greggs said that “seasonal lines were in high demand” such as its Festive Bake and winter drinks like the Salted Caramel Latte. This meant like-for-like sales at its company-managed shops soared 18.2% in the fourth quarter.

For the whole of 2022 corresponding sales rose 17.8% year on year.

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Chief executive Roisin Currie commented that “I am proud of the progress Greggs made during 2022 in challenging conditions.”

She said that “our teams did a magnificent job serving customers and managing the growing demand for Greggs products as we expand our shop estate and offer greater availability through digital channels and longer trading hours, whilst continuing to extend our menu to offer more choice.”

The FTSE 250 business said that its plant-based products “are contributing more significantly to our range over time.” It said too that use of its Greggs App — which offers features like Click & Collect as well as free products — grew strongly in 2022.

Greggs ended 2022 with 2,328 stores, the business having opened 186 outlets and closed 39 over the year.

Conditions “Will Remain Challenging”

Looking to the New Year, Greggs said that “we are confident in delivering another year of good progress in 2023 and remain excited by the significant growth opportunity for Greggs in the years ahead.”

Chief executive Currie predicted that market conditions “will remain challenging” this year. But she commented that “our value-for-money offer of freshly-prepared food and drink is highly relevant as consumers look to manage their budgets without compromising on quality and taste.”

She added that the company is in “a strong financial position that will enable us to invest in shops and supply chain capacity.”

Greggs ended the year with £191 million of cash on its books. It said that it planned to open a net 150 new stores in 2023.

What The Analysts Say

Commenting on today’s results Adam Vettese, analyst at social investing network eToro, said that “[Greggs’] business model is holding up well in the face of the worst cost-of-living crisis in a generation,” adding that “the nation’s favourite baker is clearly in tune with its customer base, with its vegan range continuing to play a larger role in its range.”

Vettese noted that the retailer’s focus on value-for-money and convenience “should hold it in good stead” during what promises to be another tough year for consumers. However, he added that “material cost inflation will continue to be a problem for much of this year and will no doubt weigh on profits.”

Analyst Sophie Lund-Yates of Hargreaves Lansdown, meanwhile, notes that “the bakery-chain’s pricing is being held as a key area of strength in current conditions, and has meant that together with cost savings, margins have held up for the full year.”

She noted too that later-day trading is proving popular thanks to the rollout of Click & Collect. Greggs has described early evening as its “fastest growing daypart” and 500 of its stores are now open until 8pm.

Lund-Yates added that “Greggs has a lot going in its favour because it exists at the end of the value spectrum, and the group is capitalising on this.”

But she added that “it will be crucial to closely monitor how out-of-home spending shapes up, because any worse-than-expected drop offs would be bad news for profits when combined with soaring costs.”