Greggs said it had traded well in the first 19 weeks of 2022, with like-for-like (LFL) sales in company-managed shops growing by 27.4%, a figure that is flattered by comparison with restricted trading conditions in the same period of 2021.
Greggs added: "Since we last reported, like-for-like sales growth in the most recent ten weeks to 14 May (when lockdowns in 2021 were easing) has averaged 15.8% and we expect this figure to continue to normalise as we start to compare with more robust trading periods in 2021.
"Sales levels in larger cities and in office locations continue to lag the rest of the estate but transport locations have shown a marked increase in activity in recent weeks. Sales of hot food and snacks are showing particularly strong growth, with chicken goujons and potato wedges proving popular."
Total sales in the 19 weeks to 14 May 2022 were £495 million, compared with £378 million in the same period last year.
Greggs added: "In the first 19 weeks of 2022 we opened 49 new shops, including 18 with our franchise partners. Recent shop openings include a number of retail parks and new travel-based units at Birmingham and Liverpool airports. In the year to date we have closed six shops, giving a total of 2,224 shops trading at 14 May, comprising 1,831 company-managed shops and 393 franchised units."
Commenting on outlook, Greggs said: "We have made a good start to 2022, with sales in line with our plan and a strong pipeline of new shop acquisitions ahead. Looking ahead, market-wide cost pressures have been increasing and consumer incomes will clearly be under pressure in the second half of the year. We will continue to work to mitigate the impact of cost pressures whilst protecting Greggs' reputation for exceptional value.
"Whilst considerable uncertainties remain, we are in line with our plan and the board's expectations for the full year outcome remain unchanged."
Ross Hindle, an analyst at Third Bridge, said: "LFL sales grew 27.4% for the period, prompting management to suggest its full-year plan is set to remain on track.
“As expected, sales in larger cities and commuter centres lag the rest of the market in terms of recovery, with the new work-from-home culture looking like it is here to stay. Footfall figures remain 6% below 2019 levels. However, Gregg’s strong store footprint has meant it’s outperformed the market from a footfall perspective.”
“The big unknown is how consumers react to the rising costs and tightening of wallets. It is believed that there is an opportunity for Greggs to gain market share from ‘posh’ coffee shops and more expensive food-to-go operators as Britons cut back on their mealtime and beverage spend.”
“However, balancing market share opportunities with margin protection is likely to be a big challenge for Greggs. The group will struggle to increase prices while still maintaining its value-for-money proposition in the market. Savoury and breakfast products are the most likely to be priced higher”
“80% of Greggs’ range is manufactured in-house, providing some flexibility in how the group navigates inflationary pressure. However, Greggs will still face intense cost headwinds.”
“Our experts expect Greggs’ EBIT margin to continue to be under pressure over the months to come, given input costs and how delivery is taking a bigger share of sales.”
“Menu reduction and loyalty schemes are the two lasting good to go trends from the pandemic and our experts do not see that changing.”