Greggs PLC: Announces Q3-2023 Trading Update

Newcastle upon Tyne / UK. (gs) British Greggs PLC, the leading bakery food-on-the-go retailer in the United Kingdom with more than 2,400 retail outlets throughout the country, announced its trading update for the 13 weeks to 30 September 2023. Strong trading continues and inflation is beginning to ease, the company said in its Q3-2023 regulatory statement. Third quarter Highlights:

• Total sales up 20.8 percent for the 13 weeks to 30 September 2023
• Company-managed shop like-for-like sales up 14.2 percent versus third quarter 2022
• 82 net new shops opened year-to-date (144 openings less 62 closures)
• Expect between 135 and 145 net shop openings in 2023 and circa 40 relocations
• Continued growth in market share driven by strategic initiatives:
  • Evening trade represented 8.8 percent of company-managed shop sales for the 13 weeks to 30 September 2023
  • 13.1 percent of company-managed shop transactions scanned on the Greggs App in the 13 weeks to 30 September 2023
• Delivery service rolling out with a second delivery partner, Uber Eats, following successful trial
• Some easing in cost inflation as expected
• Full year outcome expected to be in line with our previous expectations

Trading performance

Greggs continued to enjoy a strong trading performance over the third quarter of 2023 with total sales up 20.8 percent and like-for-like sales in company-managed shops rising by 14.2 percent when compared with the same period in 2022.

This strong LFL performance, founded on increased customer visits, reflects ongoing development of evening trading and of our digital channels and loyalty programme through the Greggs App. Evening trade (sales post-4pm) represented 8.8 percent of company-managed shop sales for the 13 weeks to 30 September 2023 (H1-2023: 8.3 percent) and Greggs App participation continues to grow, with 13.1 percent of company-managed shop transactions scanned in the 13 weeks to 30 September 2023 (H1-2023: 10.6 percent). Market insight data confirms that Greggs continues to grow its share of the food-to- go market and has maintained its leadership positions in customer satisfaction and value-for-money ratings.

Our autumn menu is now available, featuring the «Spicy Chicken» and «Veg Bhaji Baguette», served hot. New vegetarian options include the «Cheese and Honey Mustard Toastie», the «Veg Bhaji Flatbread» and the «Mozzarella and Cheddar Bites», offering customers a new hot-to-go snacking option. Wen have also introduced the «Spicy Veg Pizza», available to customers on Click + Collect and via delivery. Additions to the hot drink menu include the return of the popular «Pumpkin Spice Latte» and the new «Hazelnut Mocha» and «Hazelnut Hot Chocolate».

Shop estate and supply chain development

In the year to date we have opened 144 new shops and closed 62 shops, giving a total of 2,410 shops trading at 30 September 2023 (comprising 1,928 company-managed shops and 482 franchised units). We expect 2023 to be a record year for the absolute number of new shops opened as we expand into new locations and relocate shops to better premises within existing catchments. For the year as a whole, and taking into account relocations and closures, we now expect between 135 and 145 net shop openings and see a strong pipeline ahead for 2024. Our shop openings are giving customers more convenient access to Greggs, whilst our relocation activity increases our capacity in existing successful catchments.

Investment in our supply chain is progressing well, supporting our ambitious growth plans. A fourth production line will be commissioned at Balliol Park in Newcastle upon Tyne in the coming weeks, adding further manufacturing capacity for our iconic savoury rolls and bakes. Work is progressing well to expand the logistics capacity of our Birmingham and Amesbury distribution centres, both of which are due to come on stream in 2024.

Across the business we continue to expect capital expenditure in 2023 to be around GBP 200 million, supported by our strong balance sheet.

Extension of delivery service

At our interim results we announced we had initiated a trial with a second delivery aggregator. We have now concluded these trials to test the incremental benefit of making Greggs available for delivery on the Uber Eats platform, alongside our existing partner Just Eat. We have begun an accelerated roll out on the Uber Eats platform and expect to have around 500 shops live by the end of October 2023, with further expansion to come in 2024.

Outlook

As we had expected, the rate of cost inflation has eased as we annualise on the significant commodity-led increases experienced in 2022. At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share. We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions.

Whilst acknowledging the uncertainty in the economy as a whole and the very strong comparative performance of the business in the fourth quarter of 2022, the Board expects the full year outcome to be in line with its previous expectations.