Join our community of smart investors

Greggs pushes healthier food

Bakery chain Greggs is attempting to broaden its appeal with healthier sandwiches, longer opening hours and nicer coffee.
July 30, 2014

Greggs (GRG) is attempting to go upmarket with a push towards healthier sandwiches and barrista-style coffee. A new "balanced" range of low-calorie sandwiches was unveiled in July and is reported to be selling well. This includes the cajun chicken flatbread with tomato and coriander salsa, which is positively exotic for a company known for greasy sausage rolls and pasties.

IC TIP: Sell at 522p

Greggs has also started serving a new coffee blend slightly more suited to espresso, which it says is helping drive early morning sales, and is implementing longer opening hours. Finance director Richard Hutton said these initiatives were partly responsible for driving 3 per cent like-for-like sales growth in the first six months. But he also admitted that much of the improvement was down to soft comparatives: last year like-for-like sales dipped 3 per cent.

Meanwhile, lower input costs, good cost control and a £1.4m gain from property sales boosted the underlying pre-tax profit (before £8.3m of exceptional items) by almost a half to £16.9m. Comparatives will get tougher in the second half, but, with input costs letting up, Mr Hutton remains confident that Greggs will beat last year's full-year result.

Prior to the results announcement, Shore Capital was expecting pre-tax profit of £46.4m for the full year, giving EPS of 35p - up from 30p in 2013.

GREGGS (GRG)
ORD PRICE:522pMARKET VALUE:£528m
TOUCH:520-524p12-MONTH HIGH:580pLOW: 388p
DIVIDEND YIELD:3.7%PE RATIO:24
NET ASSET VALUE: 223pNET CASH:£16.8m

Half-year to 28 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201336211.48.66
20143738.76.26
% change+3-24-28-

Ex-div: 3 Sep

Payment: 3 Oct