Greggs profits rising

LONDON, Aug 2 (Reuters) – British baker and fast food chain Greggs said on Tuesday it was well placed to navigate a worsening cost of living crunch, saying its pricing was attractive in a market where consumer incomes were under pressure. Confidence levels among Britain’s consumers are at record lows as wages fail to keep pace with inflation that hit a 40-year high of 9.4% in June and is heading for double digits. However, Greggs, known for its sausage rolls, steak bakes, vegan snacks and sweet treats, reiterated its full-year outlook and said its customers had not cut their spending.

“As of yet we haven’t seen changes in customer behaviour,” Chief Executive Roisin Currie told Reuters. “We’re expecting more pressure on our consumers as we go into autumn with the energy prices, so we will continue to stay very focused on it and continue to watch the market.”

Currie noted that when Greggs raised prices by 5 pence to 10 pence in May, it did not see an impact on transactions. She speculated that with Greggs having an average spend of just under 4 pounds, customers were still comfortable parting with their money. Also, Greggs might be benefiting from consumers trading down to it from other more expensive outlets. She said further price rises were under review. Shares in Greggs were up 2.1% at 0834 GMT. It reported flat profit of 55.8 million pounds ($68.3 million) for the 26 weeks to July 2, reflecting the re-introduction of business rates, an increase in VAT sales tax and higher levels of cost inflation.

Total sales rose 27.1% to 694.5 million pounds, with like-for-like sales up 22.4% – figures flattered by comparison with COVID-19-restricted trading conditions in the same period of 2021. In the first four weeks of its second half, like-for-like sales were up 13.1%. Greggs said in March that it did not expect material profit growth in the current year on the 145.6 million pounds made in 2021 due to the surging cost of raw materials, energy and staff.

Greggs opened a net 58 new shops in the half, taking its total to 2,239. It sees potential for at least 3,000. It has extended evening trading to 300 shops and expanded a delivery service with Just Eat to 1,180 shops.