British baker and food-to-go company Greggs said demand for seasonal products such as its Festive Bake, Christmas lunch baguette and hot drinks helped deliver a better-than-expected 9.4% rise in like-for-like sales in the fourth quarter.
The strong finish to the year resulted in a 19.6% increase in full-year total sales to £1.81 billion (€2.10 billion), comfortably beating market expectations of a 18.1% rise.
Greggs, which ended 2023 with 2,473 stores, said inflationary pressures were reducing and it anticipated a more stable cost base in the coming year.
'A Year Of Progress'
"2023 was a year of further progress by Greggs," commented Roisin Currie, chief executive. "I am proud of our teams, who did a fantastic job serving more customers as we continue to grow our shop estate and offer greater availability through digital channels and extended trading hours."
Greggs said that it plans to continue to invest in its shops and expand its supply chain in 2024.
"We enter 2024 with plans to continue to invest in our shops and expand supply chain capacity to deliver the growth strategy, supported by our strong balance sheet," Currie added. "Our value-for-money offer, and the quality of our freshly prepared food and drink continue to evolve and position us well for further progress in the year ahead."
The British company said in a statement that its 'strong' like-for-like performance is a result of the brand's 'popularity', which was in turn attributed to ongoing efforts to expand the product range and enhance accessibility through digital channels and extended trading hours.
Analyst Viewpoint
Commenting on its performance, analyst Wayne Brown of Liberum said, "Greggs has come out with a very strong update delivering LFLs of +9.4% vs a comparative of 18% LY. Store openings are ahead of expectations and while the P&L is in line with expectations, cash generation has massively beaten our expectations with net cash of £195 at year-end vs. our £130m expectation.
"We recently moved to BUY due to some modest share price weakness towards the back end of last year and after this update, and with inflation now receding and opening expected to ramp up further, a BUY is the right call. Seems like all the strategic initiative shave contributed to such a strong performance."
Additional reporting by ESM
