REG - Greggs PLC - Trading Update

GreggsAnnouncement

14/05/2024 07:00

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RNS Number : 2411O  Greggs PLC  14 May 2024

14 May 2024

 

GREGGS PLC

("Greggs" or the "Company")

 

TRADING UPDATE

 

Continued strategic and operational progress; building capacity for further
growth in the UK

 

Highlights for the first 19 weeks of 2024

 

·    7.4% LFL* sales growth, with continued good progress across all
channels

·    64 gross new shops opened, 27 net openings, 2,500 shops now trading

·    Remain confident in 140-160 net shop openings for the full year

·    No change in cost inflation expectations; 4-5% on a LFL basis

·    Investments to increase supply chain capacity progressing well

·    Board's expectations for the full year outcome remain unchanged

 

* Like-for-like (LFL) company-managed shop sales performance against
comparable period in 2023

 

Trading performance

 

Greggs performed well in the first 19 weeks of 2024 as we progressed our
strategic growth plan. Like-for-like (LFL) sales in company-managed shops grew
by 7.4%, with delivery sales, evening trade and increased participation in the
Greggs App all supporting transaction volume growth. Total sales in the 19
weeks to 11 May 2024 were £693 million (2023: £609 million).

 

Our new over-ice drinks range including coffee, flavoured lemonades and
coolers, currently available in 300 shops, is performing well and will be
rolled out to up to 700 shops in the coming months.  Pizza boxes have been in
strong growth following a dedicated campaign and hot food continues to perform
well, with our Southern Fried Chicken Goujons and Southern Fried Potato Wedges
proving popular with customers. We also continue to extend our range of
healthier choices, introducing the vegetarian Pesto and Mozzarella Pasta and
Feta and Tomato Pasta, alongside our award-winning vegan Sweet Potato Bhaji
and Rice salad bowl.

Shop estate and supply chain development

 

During the period we opened 64 new shops, including 15 with our franchise
partners. Recent shop openings have included sites at Embankment underground
station, four shops with Tesco and three with Sainsbury's, the latter
including two petrol filling station locations. In the year to date we have
closed 37 shops (including 23 relocations), giving a total of 2,500 shops
trading at 12 May (comprising 1,986 company-managed shops and 514 franchised
units).  The pipeline for the remainder of the year is strong, including a
number of further opportunities with supermarket groups, and we remain
confident in achieving 140-160 net openings for the full year.

 

In line with our previously-communicated capital expenditure plans the
investment projects at our Birmingham and Amesbury distribution centres are
progressing well and will deliver additional logistics capacity by the end of
2024. The fourth production line for our iconic savoury rolls and bakes at
Balliol Park in Newcastle has now been commissioned, as planned, and will
increase production capacity at the site by 35% over time.

 

In order to support the longer-term growth potential of the business we are,
as previously communicated, progressing with the development of two new sites
in the Midlands which are expected to be operational in late 2026 / early
2027:

 

- We have entered into an agreement for lease on a site at SmartParc SEGRO
Derby for a facility that will be the focus of our increased manufacturing
capacity needs whilst also supporting expansion of our logistics network
capacity. The landlord is currently constructing the building, following which
we will develop and install the first phase of manufacturing and logistics
equipment through 2025 and 2026. In addition to the self-funded capital
expenditure to install the equipment a leased right-of-use asset of circa £65
million will also be recognised on the commencement of the lease.

 

- We are progressing negotiations on the purchase of land in the
Corby/Kettering area, where we will develop a National Distribution Centre for
chilled and ambient goods. This site will significantly extend our logistics
capacity across the network to circa 3,500 shops and deliver efficiencies
through semi-automated storage and picking solutions. We aim to exchange
contracts on the purchase of the land in the coming months.

 

Outlook

 

We have made a good start to the year with continued like-for-like growth in a
challenging market, reflecting the strength of our strategic plan.

 

There has been no change to the outlook for cost inflation, which we expect to
be in the range of 4-5% on a LFL basis.

 

Whilst early in the financial year, the Board's expectations for the full year
outcome are unchanged.

 

 ENQUIRIES:
 Greggs plc                                Hudson Sandler
 Roisin Currie, Chief Executive            Wendy Baker / Hattie Dreyfus /

 Richard Hutton, Chief Financial Officer   Nick Moore / Emily Brooker

 David Watson, Investor Relations          Tel:      020 7796 4133

 Tel:      0191 281 7721                   Email: greggs@hudsonsandler.com

 

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