New store openings drove sales growth in what was a fairly subdued year for Greggs, as a drop in selling price inflation meant like-for-like sales climbed just 0.8 per cent.
The company opened 49 new shops last year - a third of which were in non-high street locations - but closed down 39, leaving it with an estate of 1,419 outlets at the year-end. However, the group made real progress behind the scenes in preparation for an accelerated expansion programme that will add around 600 new shops over the coming years, including between 50 and 60 net new shops in 2010. In particular, it has centralised many group functions, reorganised its 11 bakery divisions into seven new retail regions, harmonised 80 per cent of its product range, and created a single group brand, converting the bulk of its Bakers Oven shops to Greggs fascias.
The initial benefits of this process helped raise operating margins from 7.05 per cent to 7.35 per cent, lifting operating profits 9.3 per cent to £48.4m, with further benefits expected to come this year. Broker Evolution Securities expects 2010 underlying pre-tax profits of £51.4m and EPS of 36.2p (£48.4 and 34p in 2009).
GREGGS (GRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 470p | MARKET VALUE: | £489m | |
| TOUCH: | 471-473p | 12-MONTH HIGH: | 470p | LOW: 335p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 158p | NET CASH: | £34.6m | |
| Year to end-Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 533 | 50.2 | 28.2 | 10.6 |
| 2006 | 551 | 40.2 | 24.1 | 11.6 |
| 2007 | 586 | 51.1 | 34.3 | 14.0 |
| 2008 | 628 | 49.5 | 33.6 | 14.9 |
| 2009* | 658 | 48.8 | 34.1 | 16.6 |
| % change | +5 | -1 | +1 | +11 |
Ex-div: 21 Apr Payment: 21 May *53 weeks to 2 Jan 2010 | ||||
