High-street bakery chain Greggs’ fourth quarter trading update for its 2016 financial year, ending 31 December 2016, has revealed the company grew its business 7% last year, with company-managed shop like-for-like sales increasing 4%.
The company also disclosed that it has undertaken 145 shop openings and 208 refits over the past 12 months.
Sales over the Christmas period were particularly strong, aided by a favourable trading pattern and, as a result, Greggs’ fourth quarter company-managed shop like-for-like sales grew by 6%. Excluding the final two weeks of the year, fourth quarter like-for-like sales growth was 4%.
Chief executive, Roger Whiteside, said: “We finished 2016 well, delivering our thirteenth consecutive quarter of like-for-like sales growth, and anticipate that we will report full-year results for 2016 slightly ahead of our previous expectations. In the year ahead, whilst we will undoubtedly see a number of well-documented industry headwinds, we are confident we will continue to make progress with the implementation of our strategic plan, including significant investment in our capability to supply a growing shop estate.”
Seasonal favourites such as the Festive Bake and traditional mince pies proved popular, however, the growing strength of food-on-the-go was the main driver of sales.
Greggs new ‘Balanced Choice’ bakes proved popular in addition to hot food options such as its new burritos and the brand plans to extend its hot drinks range to include vanilla latte, Fairtrade peppermint tea and green tea.
During the year Greggs opened 145 new shops, 56 of which were franchised units, and closed 79, growing the estate to 1,764 shops trading as at 31 December 2016.
The company currently has 157 franchised shops operated by partners in travel and other convenience locations. In line with its planned estate management programme, a number of freehold shops and an office building closed which resulted in disposal gains in the year of £2.2 million, some £1.5m to 2m higher than might be expected in an average year.
In 2016, 208 shops were converted to the “bakery food-on-the-go” format and Greggs plans to refurbish shops at a similar rate in the year ahead to maintain the modern, food-on-the-go experience for customers.
Alongside the trading activity, Greggs delivered a number of significant elements of its previously announced strategic investment programme, including successful trials of its new shop replenishment system. The company also commissioned its new distribution centre in Enfield, which is operating well, and has enabled the planned closure of its bakery in Twickenham in November.
Looking forward, the chain expects greater uncertainty in the trading environment with increased pressure on real income growth and forecasts industry-wide cost pressures in 2017 which will likely have a modest impact on margins in the short term.
Greggs foresees another busy year of change in 2017 as it continues to progress its investment in better systems and the transformation and development of its supply chain. Over the medium term the company is confident of making further progress as it implements it plan to grow Greggs into a modern food-on-the-go brand.