Food-on-the-go drives sales at Greggs

Greggs, the leading bakery food-on-the-go retailer in the UK with over 1,750 sites, has reported that for 52 weeks ended 31 December 2016, total sales grew by 7% and company-managed shop like-for-like sales grew by 4.2%.

Sales over the Christmas period were particularly strong, aided by a favourable trading pattern and, as a result, fourth quarter company-managed shop like-for-like sales grew by 6.4%. Excluding the final two weeks of the year, fourth quarter like-for-like sales growth was 4.1%.

Customers enjoyed seasonal favourites such as Festive Bake and traditional mince pies but the growing strength in food-on-the-go was the main driver of sales. The new 'Balanced Choice' bakes have proved popular along with hot food options such as the new burritos, and the hot drinks range is to be expandd to include Vanilla Latte alongside Fairtrade Peppermint Tea and Green Tea.

During the year, the firm opened 145 new shops (including 56 franchised units) and closed 79, growing the estate to 1,764 shops trading as at 31 December 2016. It now has 157 franchised shops operated by partners in travel and other convenience locations. As planned, the estate management programme included the closure of a number of freehold shops and an office building. This resulted in disposal gains in the year of £2.2m.

In 2016, Greggs converted a further 208 shops to its successful 'bakery food-on-the-go' format. It expects to refurbish shops at a similar rate in the year ahead to maintain our modern, food-on-the-go experience for customers.

Alongside the trading activity, Greggs delivered a number of significant elements of its previously announced strategic investment programme, including successful trials of our new shop replenishment system. It also commissioned a new distribution centre in Enfield, and this enabled the planned closure of the bakery in Twickenham in November.

Chief Executive Roger Whiteside commented, 'We finished 2016 well, delivering our thirteenth consecutive quarter of like-for-like sales growth, and anticipate that we will report full year results for 2016 slightly ahead of our previous expectations.

'In the year ahead, whilst we will undoubtedly see a number of well-documented industry headwinds, we are confident we will continue to make progress with the implementation of our strategic plan, including significant investment in our capability to supply a growing shop estate.'

Outlook
Looking forward there is greater uncertainty in the trading environment with increased pressure on real income growth. Greggs also continues to expect some industry-wide cost pressures in 2017 and these are likely to have a modest impact on margins in the short term.

2017 will be another busy year of change as the firm continues to progress its investment in better systems and the transformation and development of the supply chain. Over the medium term, Greggs is confident of making further progress as it implement the plan to grow as a modern food-on-the-go brand.