Greggs holding its own despite unsavoury cost outlook
BAKERY chain Greggs has revealed its sales surged by nearly a fifth over the year to date as its cheap meals remain "compelling" to cash-strapped consumers.
Sales at the food-on-the-go retailer grew by 17 per cent since the start of the year compared to 2022, partly because the first few months of the previous year were impacted by the Omicron variant, Greggs said.
Hot food like chicken goujons and wedges are proving popular, as well as strong demand for pizza as the retailer moves further into the evening market.
Greggs, which has 18 stores in Northern Ireland, has steamed ahead with growing its store estate, opening 63 new shops over the period and closing 25 franchises, leaving it with more than 2,360 shops by mid-May.
The macroeconomic backdrop remains "challenging" with ongoing cost inflation and household incomes under pressure, but the chain said it is confident its "outstanding value proposition continues to be compelling".
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said: "This is a solid performance from Greggs in a challenging economic environment, with little sign so far of consumers cutting back on sausage rolls and pasties.
"The cost of raw materials, energy and wages are all rising rapidly and Greggs is significantly exposed to all three.
"But at least inflation appears to have stabilised and isn't getting worse. And crucially, sales are rising strongly, which is providing oxygen to help absorb cost pressures."
He said there is no doubt Greggs' brand is resonating strongly with the UK consumer and is in fine fettle.
"Inflationary pressures will continue to bite in the rest of the year, holding back profits," he added.
"But Greggs is in a far better position than most retailers to weather the storm, and is more than holding its own.
"Should inflation start to moderate, the business looks well primed to return to profit growth."