Greggs shares jump 6% on strong Q3 sales, steady guidance, expansion plans

Investing.com -- Greggs Plc (LON:GRG) shares rose more than 6% on Wednesday after the U.K.-based bakery chain reported steady third-quarter sales, maintained its full-year outlook and outlined a series of operational and strategic developments.

For the 13 weeks to Sept. 27, Greggs said total sales rose 6.1% year-on-year, while like-for-like (LFL) sales in company-managed shops increased 1.5%. 

That compared with a 2.6% LFL increase in the first half of the year but was ahead of a weak June, which saw about 1% growth. Year-to-date, total sales were up 6.7% and LFL sales rose 2.2%.

The food-on-the-go retailer said trading improved in August and September after weaker performance in July, which it attributed to extended hot weather. 

“Q3 LFLs of +1.5% are below the H1 run-rate (+2.6%), but ahead of the weak June (c.+1%), and broadly consistent with our expectations (JEFe+2%),” Jefferies analysts said in a note. 

They added that the improvement in later months supports expectations of “ an acceleration in LFLs as we progress into Q4 with (hopefully) more normal weather patterns and against markedly weaker comps.”

At quarter-end, Greggs operated 2,675 shops, of which 2,096 were company-managed and 579 franchised. In the year to date, the company opened 130 new shops and closed 73, including 39 relocations, resulting in 57 net new openings. 

It now expects about 120 net new shop openings in 2025, slightly below earlier guidance of about 145, citing “the timing of opportunities.”

The company confirmed that its cost inflation pressures have eased slightly for the year. Despite lowering its net new opening target, Greggs maintained its full-year expectations. 

Jefferies noted that the change could “add weight to the ‘peak Greggs’ narrative, even if it is not one to which we subscribe,” but reaffirmed its positive view on the company’s long-term prospects, retaining a “buy” rating.

Greggs has also moved to expand its product range and retail presence. In September, it extended its “Bake at Home” frozen range through a partnership with Tesco, launching five products. 

The range is now available in 930 Iceland stores and 820 Tesco stores across the United Kingdom, as well as online.

Investment in supply chain capacity remains a priority. Automation testing is underway at the frozen product manufacturing and logistics site in Derby, on track for opening in 2026. 

Construction of a new chilled and ambient national distribution centre in Kettering is nearing completion, with operations scheduled to begin in 2027.

Jefferies added, “after a disappointing summer, we are encouraged to see Greggs retain its FY guidance.”