Greggs warns on higher prices
In the 13 weeks to 3 October, the bakery chain’s like-for-like sales in its own shops grew by 4.9% against strong comparatives, slightly ahead of its expectations.
Total sales for the food retailer were up 5pc during the three months to the end of September, while like-for-like sales in its own shops were similarly strong with a 4.9pc increase.
Greggs now pays its shop staff £7.11 an hour, but George Osborne announced in the summer budget that the UK’s hourly minimum wage will rise to £7.20 for over 25s as of April next year and will rise to at least £9 an hour by 2020.
A total of 65 new shops have been opened during the year, including 35 franchised units predominantly in transport locations.
Greggs said its healthier “Balanced Choice” range, which recently introduced drinks with no added sugar, was proving popular with customers, although it did not give sales figures.
And we have just launched the hot eating ranges for the autumn, with new flavours of soup and a relaunch of hot sandwiches doing really well’.
The company, whose fans include the actor Jake Gyllenhaal, said changing products through the day plus its value deals had attracted customers in the third quarter of the year. As of 6 October, the baker has 1,668 stores. As a result, it expects its shop numbers for the full year to increase by a net 50 to 60 overall.
It has acquired a freehold distribution depot near its bakery in Enfield to cater for growth potential, particularly in south-east England where its existing space is facing pressure. The total investment, including conversion works, is likely to be around £13m and it expects that the facility will be brought into use in the second half of 2016.
Chief executive Roger Whiteside told the BBC that the chain already paid staff more than the national minimum wage, but that rising labour costs would lead to “longer term inflationary pressure”.
Following the better-than-expected performance in the third quarter, Greggs told investors that it expects “to deliver good growth for the year, slightly ahead of our previous expectations”.