Star baker: Greggs shares soar as sales grow ahead of expectations

Shares in Greggs soared more than 15 per cent this morning on the news that total sales had grown nine per cent since the beginning of October.

The high street bakery chain expects full-year profit before tax to be at least £86m, it announced today in a trading update.

Like-for-like sales in company-managed stores were up 4.5 per cent on the same period the year before, putting performance ahead of expectations.

In the year to date, total sales have grown by 6.6 per cent and like-for-like sales are up by 2.5 per cent.

In a statement this company said: “This stronger trading in October and November is particularly encouraging as it builds on good comparative sales in the same period last year.

“Operational costs have been well controlled and, whilst there is still much to play for over the final few weeks of the year, the board now anticipate that full year underlying profit before tax (excluding exceptional charges) will be at least £86m.”

The news comes after Greggs struggled with slow sales growth in the third quarter, with like-for-like sales rising just 3.2 per cent between July and September compared to five per cent a year earlier.

Slow sales growth was attributed to “particularly hot weather” that led to unpredictable trading conditions.

“It may not be the most glamorous of names but in stock market terms budget baker Greggs has star quality," said broker AJ Bell.

“As Greggs makes a lot of the goods it sells, it is highly operationally geared or, in other words, any increase in sales has an outsized impact on profitability.

“Operational gearing works both ways and a deterioration in trading would have a disproportionate impact on the downside too. Though Greggs is not unaffected by what is happening in the consumer backdrop, its attractive prices should provide some resilience against economic uncertainty.”