Greggs shrugs off strikes and cold weather to report £1.5bn in annual sales

Greggs saw total annual sales surpass £1.5billion last year as strong festive trade offset concerns about the potential impact of rail strikes and poor winter weather.

The Newcastle-based bakery chain, famous for its sausage rolls and pasties, revealed overall revenues climbed by 23 per cent last year, compared to £1.23billion in the prior 12 months.

On a like-for-like basis, sales in group-managed stores grew by 17.8 per cent, while they rose by 18.2 per cent in the final three months amid high demand for the firm’s Christmas offering.

Greggs noted strong interest in its Festive Bake and Salted Caramel Latte products, but said plant-based products, such as its Vegan Festive Baguette, contributed ‘more significantly’ to trade.

This was despite strike disruption in recent months causing a resurgence in people working from home, as well as bitterly cold winter conditions.

The FTSE 250 business is less heavily reliant than other food-to-go rivals on the commuter or travel market, which has been the most affected by a drop in trade since the Covid-19 pandemic started.

Greggs said sales growth also reflected the Omicron variant’s emergence in the previous year when demand was negatively impacted by the reintroduction of restrictions on day-to-day activities.

Roisin Currie, the group’s chief executive, said: ‘We enter 2023 in a strong financial position that will enable us to invest in shops and supply chain capacity to bring Greggs to even more customers across the UK.’

The company anticipates opening about 150 extra stores during the year on the way to achieving its target of having 3,000 UK establishments by 2028.

Greggs nonetheless warned of further material cost inflation, which has already forced it to implement numerous price hikes on key items, including its  sausage rolls and steak bakes.

Consumer price inflation in Britain reached a four-decade high of 11.1 per cent in October, prompted by Russia’s full-scale invasion of Ukraine leading to soaring food and energy costs. 

Greggs warned back in the summer that the surge in costs is expected to result in full-year profits flatlining, although it has continued to reassure investors that the quality and price of its products gives it an edge in the food-to-go market. 

As Adam Vettese, an analyst at online trading platform eToro, said: ‘Gregg’s impressive fourth-quarter sales growth suggests its business model is holding up well in the face of the worst cost-of-living crisis in a generation.

‘At the same time, the nation’s favourite baker is clearly in tune with its customer base, with its vegan range continuing to play a larger role in its range.

‘Looking forward, while things will be tight financially for households in 2023, Greggs’ focus on value-for-money and convenience should hold it in good stead.

Greggs shares were up 0.6 per cent to £24.56 during the late morning on Thursday, although their value has contracted by over a quarter in the past 12 months.