Greggs – 2023 Gets Off To A Good Start

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Greggs plc (LON:GRG) reported full-year revenue up 23% to £1.5bn, whilst life-for-like (LFL) sales in company-managed shops rose 17.8%. Revenue growth was driven by 147 net new shop openings, an increase in prices and a strong first quarter that benefited from a lockdown-impacted comparable period a year earlier.

Profit before tax was up 1.9% to £148.3m. Higher revenue was largely offset by significantly higher costs and reduced support from Government pandemic measures that had been in place over the prior year.

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Q4 2022 hedge fund letters, conferences and more


Free cash flow of £152.4m was down from £235.3m the prior year, the difference largely due to increased investment. At the year-end, net debt including lease liabilities was £109.7 (2021: £84.6m).

2023 has started with LFL sales up 18.8%, in line with expectations. Cost inflation is expected to trend around 9-10% for the year.

The board has proposed a final dividend of 44.0p, giving a total for the year of 59.0p (2021: 57p).

Greggs's Earnings

Matt Britzman, equity analyst at Hargreaves Lansdown

“It’s not just sausage rolls that are flying off Greggs’ shelves these days, pizza and chicken goujons join the party, as later shop openings and a push in the delivery game yield results. It’s later in the day that Greggs is seeing the strongest sales growth and it’s leveraging the trend well, with 500 shops open until 8pm and plans to extend that further over 2023.

Delivery volumes have been normalising to approximately 5% of sales, but management remains confident longer-term opportunity remains intact – we’re inclined to agree. Click + Collect will be a key focus in 2023, and the Greggs app should help drive engagement with customers, which is seeing strong growth with 1.1 million active customers in Q4.

The cost outlook was something we were keen to hear more about and the news is relatively good. 9-10% inflation over 2023 is by no means an easy hurdle to overcome, but the group’s secured forward cover for all electricity requirements up to the end of Q3 and made progress on locking in some food and packaging costs too – cost visibility in this environment is key.

2023’s got off to a decent start and there are clear signs that Greggs’ strategy is progressing well, the direction of travel looks promising.”