Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Greggs served up a tasty trading update, with sales growth accelerating in the second quarter as customers tucked into more of its freshly baked goods.
“Continued menu tweaks and improvements have drawn existing customers back, and the addition of new salads and iced coffees to the lunchtime menu is helping the group appeal to a new and younger customer base.
“Partnerships with franchisees and grocery retailers are progressing well, helping sales growth outpace last year’s rates. Alongside tight cost controls and a soft comparable period, profit growth so far this year has been ‘good’.
“Looking ahead, the cost picture is still looking better than it has for some time, despite the Middle East conflict bringing additional pressures.
“Having been proactive and locking in prices for around 85 per cent of its energy needs, Greggs expects cost inflation to only run at about three per cent this year.
“The group’s still targeting around 120 net new store openings this year too, after a slow start, which has seen only 20 net new openings so far.
“All in, the improving sales performance against a difficult trading backdrop shouldn’t be overlooked.
“And with costs still in check, management reiterated all full-year guidance, pointing to profits landing around last year’s levels, which now looks a touch conservative to us if recent momentum continues.”
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