By Geoffrey Smith
Investing.com — Greggs (LON:) mentioned on Tuesday it bounced again in type from the pandemic, permitting it to maintain its revenue forecast for the yr unchanged regardless of relentless value pressures.
The bakery chain mentioned gross sales rose 27% from a yr earlier to 695 million kilos ($849 million) within the first half, as its shops across the U.Okay. reopened within the wake of the pandemic. Comparable retailer gross sales rose 22%.
Nonetheless, revenue earlier than tax was largely stagnant at 55.8 million kilos, reflecting the top of the federal government’s aid on enterprise charges, a rise in VAT, and inevitably, increased value inflation.
Greggs mentioned it anticipated its personal prices to rise some 9% over the yr as an entire, largely as a consequence of rising costs for meals, packaging, and vitality. Nonetheless, the board was nonetheless assured sufficient to go away its steering for the yr unchanged, not least as a result of the speed of store openings is ready to speed up within the second half.
“Clearly there are appreciable uncertainties within the financial system as an entire, however we proceed to commerce consistent with our plan and are making good progress towards our strategic goal to grow to be a bigger, multi-channel enterprise,” chief government Roisin Currie mentioned in a press release.
“If Greggs can keep its latest gross sales momentum, it should go some technique to offsetting inflationary pressures,” mentioned Charlie Huggins, head of equities at Wealth Membership, in emailed feedback. “However the group’s near-term prospects nonetheless look relatively unappetising given the extraordinarily unsavoury value outlook.”
Huggins reckoned that the outlook “might be roughly baked into the share worth, however till inflation comes down, Greggs should run arduous simply to face nonetheless”.
Greggs shares have had a wild journey within the final two and a half years because the pandemic severely disrupted a strategic transformation that has seen it broaden its choices and increase into on-line gross sales and supply. The shares are actually roughly the place they have been when COVID-19 first arrived within the U.Okay., having misplaced 40% after which greater than doubled via the top of 2021. Inflation issues and the weak outlook for U.Okay. client incomes have left the inventory down 38% up to now this yr.