Greggs profits set to bounce back to pre-pandemic levels

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CARDIFF, WALES - NOVEMBER 16: A close-up of a Greggs store sign on November 16, 2020 in Cardiff, Wales. Many UK businesses are announcing job losses due to the effects of the coronavirus pandemic and lockdown. (Photo by Matthew Horwood/Getty Images)
In the first 18 weeks of 2021 Greggs opened 34 new shops, including 13 with franchise partners. Photo: Matthew Horwood/Getty Images

High street bakery Greggs (GRG.L) said it had seen a strong recovery in sales on Monday morning, following easing of COVID-19 restrictions. 

It said the trading environment was "highly unusual" due to prolonged uncertainty surrounding opening up the economy, and that the government roadmap to ease restrictions will see "increased competition as cafes and restaurants are able to compete more effectively with our largely take-out offer."

Total sales in the 18 weeks to 8 May 2021 were £352m ($495m), compared with £280m in 2020, and £373m in 2019. This signals a near bounce back to pre-pandemic levels.

Greggs said that while "considerable uncertainty remains," its profits for the year could be around 2019 levels. This is "materially higher than the Board's previous expectation." 

Shares opened more than 6% higher on Monday morning in London to lead the FTSE 250 (^FTMC) index. 

Greggs shares jumped on a positive trading update. Chart: Yahoo Finance UK
Greggs shares jumped on a positive trading update. Chart: Yahoo Finance UK

Expansion is also still on the cards. In the first 18 weeks of 2021 Greggs opened 34 new shops, including 13 with franchise partners. 

The takeaway sausage roll provider said: "The emphasis of our estate expansion continues to be in those locations where performance has proved to be most robust, such as Retail Parks, Roadside and Petrol Filling Stations."

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In the year to date Greggs closed 11 shops, giving a total of 2,101 shops trading at 8 May (comprising 1,761 company-managed shops and 340 franchised units).

A pivot to delivery has been necessary during prolonged lockdowns and is now available from 800 shops; sales represented 8.2% of company-managed shop sales in the most recent eight weeks.

The update followed cautious but positive news in January 2021.

In Janaury CEO Roger Whiteside said: "In light of the recent government announcements significant uncertainties remain in the near-term.  

"We have taken action to position Greggs to withstand further short-term shocks and are optimistic about our prospects for growth once social restrictions are lifted. I want to thank everyone who has supported Greggs through 2020."

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