Greggs plans to open 150 new stores despite elevated pay and energy costs
Greggs, the bakery chain, says it expects to open 150 net new stores this year despite persistent headwinds from pay rises and energy costs.
The company, best known for its sausage rolls and steak bakes, said that it expected challenges from high inflation to remain throughout 2023 while revealing upbeat sales figures for its last financial year.
It reported like for like sales growth in company-managed shops of almost 18%, taking revenues above £1.5bn during 2022.
Pre-tax profits came in almost 2% higher at £148.3m.
They were hurt by higher ingredient, energy and staff costs as pay increases reflected the elevated levels of inflation.
Greggs said it achieved a record 186 new shop openings over the year and closed 39, taking its estate to 2,328 shops.
The chain said it aimed to better the 147 net openings achieved last year during 2023 and said it had ambition to take its total to 3,000 shops in time.
Profits, it forecast, would rise 9% this year despite its cost inflation running at a level up to 10% compared to the 9% witnessed in 2022.
It reported that trade had been bolstered by deliveries and evening trade – with the likes of pizzas and chicken goujons proving popular in terms of growth despite the continuing squeeze on consumers’ budgets from the cost of living crisis.
Shop sales were more than 18% ahead of last year during the first nine weeks of 2023, it added, but said the figure was somewhat flattered by a tough comparison due to the impact of Omicron variant COVID disruption at the start of 2022.
Chief executive Roisin Currie said: “2022 has been a year of strong progress for Greggs, the result of committed efforts to deliver our strategic growth plan.
Read more from business:
Hundreds of community pharmacies ‘could close due to rising costs’
One in seven people ‘skipping meals’ as prices soar
“The significant opportunities on which the plan is based will remain centre stage in the year ahead as we make Greggs more accessible to even more customers.
“Although consumer incomes remain under pressure, Greggs continues to offer exceptional value to people looking for great tasting, high-quality food and drink on-the-go.
“We have an exciting, ambitious plan for the years ahead and, by continuing to nurture what makes Greggs special, I believe we are extremely well-placed to realise the opportunity to become a significantly larger, multi-channel business.”
Shares, up around 17% in the year to date, were 1% lower in early deals on Tuesday.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Greggs has delivered good sales growth, but not much of that has landed in the bottom line.
He added: “Rising costs are undoubtedly a big part of that story, but the company is taking good steps towards mitigating those increases and continuing to grow through measures like later trading hours and new shop openings.”
