Baker Greggs sees more growth as Britons 'seek value'

British bakery and fast food chain Greggs forecast more growth this year, as its value products, longer opening hours, loyalty app and new menu options like hot wraps and loaded wedges help drive sales despite squeezed consumer incomes.

Over the first nine weeks of 2023, underlying sales rose 19%, compared with the same period a year earlier when the Omicron variant of COVID-19 was rampant, said Greggs, adding that it expected growth to slow over the year.

That still puts the group, which trades from over 2,300 outlets across Britain, on course to lift profit by about 9% this year, said Chief Executive Roisin Currie, even though household budgets across the country are shrinking.

"Customers are seeking out value and therefore they're coming to Greggs," Currie, who has been chief executive since last May, said in an interview on Tuesday.

The Greggs app, which gives users their tenth product free, is attracting customers looking for savings, she said, while extending opening hours into the evening is also boosting sales, with pizza or chicken goujon sharing boxes popular.

But Currie said inflation would continue to drag on the business.

Last year, profit was held back by rises in the prices of ingredients, energy and labour, with cost inflation totalling about 9%. Currie said she expected it to be 9%-10% this year, with higher wages the biggest challenge.

For 2022, Greggs posted pretax profit of 148.3 million pounds ($178.6 million), in line with analysts' forecasts, on total sales which came in 23% higher. Greggs is comfortable with a consensus forecast for 2023 profit of 161 million pounds.

The company's shares traded down 0.5% in early deals. The stock has climbed 17% since the beginning of the year.

"Greggs has demonstrated impressive resilience in 2022 with continued strong like-for-like sales growth throughout the year," Goodbody analysts said.

($1 = 0.8306 pounds)