Greggs flags flat full year profits as it says it’s cautious on consumer outlook
Greggs has said profits will be flat for 2018 as the baked goods business warned it is cautious about the consumer outlook.
But investors were happy with its solid half year update: Greggs' share price was up 5.9 per cent in early trading.
The figures
Total sales at Greggs rose 5.2 per cent to £476m, with like-for-likes up 1.5 per cent. However underlying operating profits, excluding exceptional items, fell from £27.6m to £25.7m.
Reported pre-tax profit including property profits and exceptional charges rose to £24.1m from £19.4m. Last year it was hit by an £8.3m restructuring charge, whereas for this period that dropped down to £1.9m.
The baked goods chain has increased its ordinary interim dividend per share by 3.9 per cent to 10.7p.
Why it's interesting
Like many retailers, Greggs has been affected by the Beast from the East, however the chain has weathered much of the storm with continued growth in developing strategic categories including hot drinks, breakfast, healthier choices and hot food options.
Greggs has expanded its value meal deals to include healthier options for breakfast, as well as a new pizza slice and a drink offer after 4pm.
And it continues to expand across the country, opening 59 stores – including its first tube station presence at Westminster – while shutting 25. For the full year, it expects to have opened around 100 new net shops.
What Greggs said
Chief executive Roger Whiteside hailed a "resilient performance despite challenging market conditions", saying the firm was making "good progress with our strategic investment programme to transform the business into the customers' favourite for food-on-the-go".
He added: "While we remain cautious in respect of the outlook for sales in the balance of the year given the consumer backdrop, we are confident in the medium and long-term growth potential for the business, supported by customers' response to our initiatives, our strong cash generation and the ongoing strategic investments that we are making.
"Over the year as a whole we continue to believe that underlying profits (before exceptional costs) are likely to be at a similar level to 2017."