UK bakery retailer Greggs has reported that total sales were up by 7.4% to £960 million in 2017, with like-for-like sales increasing by 3.7%.
The pie and pastry maker saw operating profit rise 4.6% to £81.7 million, while pre-tax profit fell slightly to £71.9 million.
Greggs says that this growth was driven by its expansion and development plans, having opened 131 new stores last year, bringing its total network to 1,854 outlets across the country.
Improvements were also made to its product range, with specific focus on hot drinks and hot food, as well healthier options, with the 'Balanced Choice' range now accounting for more than £100 million of sales.
"In 2017 we delivered another strong performance in challenging economic circumstances as rising inflation impacted both our own costs and customers' disposable income," said Roger Whiteside, chief executive of Greggs.
"At the same time we continued to make good progress with our business transformation programme."
Business Outlook
Clive Black, head of research at Shore Capital, said that although these results are lower than analyst expectations, Greggs is making positive progress.
"Newcastle’s finest major sausage roll maker, now also swimming in the world of cranberries, falafel and porridge, has reported another year of profit progress albeit a tad behind our forecasts, which we believe were a little bit above consensus," said Black.
"Greggs reports that it is ‘encouraged’ by recent trading, with like-for-like sales up by 3.2% in the eight weeks to the 24 February, a little behind our 3.5% full-year expectation, noting as we do that the Greggs sausage roll has gone up from 85p to 90p in Merseyside, with total sales up by 6.2%, again a little behind our 7.2% FY2018 expectation."
Looking ahead, Greggs says that it plans to increase the rate of store openings this year, with the number of new additions expected to be in the 110-130 range.
The bakery giant is also planning a record year for investment in its supply chain, with the aim of increasing capacity to further grow the business.
"Whilst the UK consumer outlook remains challenging, we are encouraged by the start to the year," added Whiteside.
"2018 will be the peak year for investment in our supply chain as we create the platforms for further growth. We also plan to open a record number of new shops as we implement our plan to grow Greggs as a leading food-on-the-go brand."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
