Sales growth slows at Greggs as it warns of increased Brexit costs
Sales growth at bakery chain Greggs slowed in the third quarter as it warned of tough comparatives and increased input costs because of Brexit.
Greggs today posted a sales increase of 12.4 per cent for the 13 weeks to 28 September.
Read more: Greggs upgrades outlook as sales rise on vegan sausage roll success
Like-for-like sales at company-managed shops grew 7.4 per cent, down from 10.5 per cent in the first half of the year.
The company had warned that strong comparatives in the previous year meant it was unlikely to repeat that result.
It said its expectations for the full-year remained unchanged.
Greggs also warned that Brexit was putting pressures on both labour and food input costs.
The company said it was “building stocks of key ingredients and equipment that could be affected by disruption to the flow of goods into the UK”.
“Greggs sort of notes the chaos of the UK’s relations with the EU and so states that it is building stocks of key ingredients, look out for the sausage meat mounds in Tyneside,” said Clive Black and Darren Shirley, analysts at Shore Capital Markets.
In the year to 28 September, the company said it had opened 56 net new shops, opening 90 new shops and closing 34 shops to take its total to 2,009 shops trading at 28 September.
Russ Mould, investment director at AJ Bell said: “Today’s trading update was always going to be a tough one for Greggs. The publicity around its vegan sausage roll earlier this year was so effective that it drove more people to visit its stores and that had such a positive impact on earnings. Sales continued to beat expectations as the year went on, leading to a sharp rise in its share price.”
He added: “Interestingly the word ‘vegan’ isn’t even mentioned in the latest update, which might suggest that the buzz around its alternative sausage rolls is starting to die down. There is also no mention of plans to introduce vegan versions of the rest of its product range.
Read more:Greggs boosts sales and profits
“Greggs may simply be trying to moderate expectations so that investors don’t get too carried away with this year’s stellar performance.”
Shares fell 6.79 per cent this morning to 1,948p.