Festive bakes and salted caramel lattes boost Greggs’ Christmas

Greggs (GRG.L) said its Festive Bakes, mince pies and salted caramel lattes, along with breakfast and lunch offers, appealed to cash-strapped Christmas shoppers, helping like-for-like sales rise 18.2 per cent in the final quarter.

The British baker and food-to-go chain said the resilient end to the year, in contrast with a COVID-hit Christmas in 2021, boosted total sales for 2022 to a better-than-expected 1.51 billion pounds ($1.81 billion), up 23 per cent.

However it stuck to its forecast of limited profit growth for the year, reflecting higher costs for energy, ingredients and staff.

Chief Executive Roisin Currie said cost inflation would continue to be “material” in 2023, but she was confident Greggs would continue to make progress.

“While market conditions in 2023 will remain challenging, our value-for-money offer of freshly-prepared food and drink is highly relevant as consumers look to manage their budgets without compromising on quality and taste,” she said in a statement.

Greggs has widened its menu to include more vegan options as well as new drinks and hot options.

The Festive Bake, which wraps chicken, bacon, stuffing and cranberry sauce in pastry, and is also available in a vegan version, is a Christmas favourite for many of its customers.

Greggs raised prices last year after experiencing cost-inflation of about 9 per cent, Currie said, but it had limited the increases to 5 or 10 pence per item.

She said Greggs would keep working to mitigate the impact of rising costs this year after a “tough” 2022 for consumers.

“I think 2023 will certainly start off tough, and that’s why offering value to customers is absolutely central to our proposition,” Currie told Reuters.

Retailers focused on value looked to be the early winners on Britain’s high streets this Christmas, with discount retailer B&M also reporting higher sales on Thursday.

Shares in Greggs were up 0.4 per cent in early deals.

Analysts on average expect the company, which trades from 2,328 shops and expects to open around 150 more this year, to post a pretax profit of 148.0 million pounds for 2022, up from 145.6 million pounds in 2021, according to a Refinitiv estimate.

($1 = 0.8331 pounds)