Greggs, the leading bakery food-on-the-go retailer in the UK, with more than 2,000 retail outlets, has posted Q4 results, which are so exceptional that staff are to get a £300 bonus, costing the company £7m.
The results are as follows:
• Total sales rose 13.5% (2018: 7.2%).
• Company-managed shop like-for-like sales up 9.2% (2018: 2.9%)
• 138 new shops opened in the year, 41 closures
• 2,050 shops trading as at 28 December 2019
• £7m special payment to employees
• Full year underlying profit before tax expected to be slightly higher than our
previous expectations
* 52 weeks ended 28 December 2019 (2018: 52 weeks ended 29 December 2018)
Chief Executive Roger Whiteside commented, “We delivered a strong finish to what has been an exceptional year for Greggs. The major investments we have made in recent years to make Greggs an attractive choice in the food-on-the-go market are delivering. Consumers are responding very positively and we have seen increasing visits from both new and existing customers.
'Our record financial performance in 2019 has enabled us to enhance returns to shareholders. I am delighted to announce that we will also be making a special additional payment to all of our colleagues across the business who have worked so hard to deliver this success in what has been a phenomenal year.
'Looking to the year ahead, we face strong sales comparatives and cost inflation headwinds present a challenge. However, with strong momentum in the business we see further growth opportunities across a number of channels as we invest in new ways to make Greggs more accessible and convenient for customers.”
Trading update
For the 2019 financial year, total sales grew by 13.5 per cent and company-managed shop like-for-like sales grew by 9.2 per cent. In the fourth quarter company-managed shop like-for-like sales grew by 8.7 per cent (Q4 2018: 5.2 per cent).
Growth continues to be driven by additional customer visits with strong demand across the group's traditional ranges and, of course, the huge popularity of the now-iconic vegan- friendly sausage roll. As we enter the new year, Greggs has added to its vegan-friendly menu with the launch of the ‘Vegan Steak Bake’ and the first vegan doughnut.
During the year, the firm opened 138 new shops (including 45 franchised units) and closed 41, growing the estate to 2,050 shops trading as at 28 December 2019, 302 of which are franchised shops operated by partners in travel and other convenience locations. In the year ahead, Greggs expects around 100 net shop openings.
Financial position & outlook
Greggs has finished 2019 in a very strong financial position, despite having made significant investments in its strategic programmes and having enhanced shareholder returns by the payment of a special dividend of £35m in October 2019.
In the context of this exceptional year, the board has agreed to make a special payment to employees, in recognition of their crucial contribution to business success. All of staff will share in a one-off payment costing £7m, which will be paid at the end of January.
With strong momentum in the business there are clear opportunities for further growth as Greggs begins to invest in new ways to make Greggs more accessible and convenient for customers. In particular the company expects to scale up successful elements of its trials in the extension of trading hours and by making delivery more widely available.
Greggs sees a number of cost headwinds in the year ahead and expect these to be higher than we have seen recently, as National Living Wage costs increase faster than general inflation and the cost of pork continues to rise significantly. As usual, the group will seek to mitigate as much of this as is possible through business efficiency, but will also ensure that our prices continue to represent great value.
Given the strength of trading in the latter part of 2019, the Board now expects that full year underlying profit before tax, after the cost of the special payment to employees, will be slightly higher than previous expectations when Greggs reports its preliminary results for 2019 on 3 March 2020.