Greggs (GRG) the baker was on a roll last year, as a fresh strategy to focus on the fast-growing food-to-go market bore fruit. Shop refurbishments and new products brought more customers through the door, driving up like-for-like store sales by 4.5 per cent. A new coffee blend, cheaper than rivals, was a hit, selling £1m-worth a week. A healthy sandwich range is also appealing to the more health-conscious consumer.
Supply chain efficiencies and a structural reorganisation, completed ahead of schedule, are also delivering better-than-expected results. Combined with lower input costs and operational gearing, that pushed up the profit margin to 7.2 per cent, from 5.4 per cent, and boosted adjusted pre-tax profits by 41 per cent to £58.3m. Moreover, strong cash generation has prompted management to resume a progressive dividend policy and initiate £10m-worth of share buybacks.
So far this year, like-for-like sales are running 6 per cent ahead. Greggs will continue to refit stores and trim costs. New products, including chorizo soup, are set to be launched, too. N+1 Singer expects pre-tax profit of £64.7m this year, giving EPS of 49p, up from £58.3m and 43p in 2014.
| GREGGS (GRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 898p | MARKET VALUE: | £909m | |
| TOUCH: | 895-901p | 12-MONTH HIGH: | 911p | LOW: 483p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 244p | NET CASH: | £43.6m | |
| Year to 3 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 662 | 52.5 | 37.8 | 18.2 |
| 2012 | 701 | 60.5 | 45.0 | 19.3 |
| 2013 | 735 | 52.4 | 40.0 | 19.5 |
| 2014 | 762 | 33.2 | 24.1 | 19.5 |
| 2105 | 804 | 49.7 | 37.4 | 22.0 |
| % change | +5 | +50 | +55 | +13 |
Ex-div: 9 Apr Payment: 8 May | ||||
