Institutional Comment: Christmas treat
Greggs has announced its third successive profit upgrade, with own shop like-for-like sales for December up 8.2% and 4.5% for the full year (ahead of our estimate of 4.2%). Strong trading has been driven by Greggs’ self-help programme: the success of the revamped product and meal deal offers, as well as store refurbishments. We upgrade our EPS estimates by 5% for FY14 and FY15. We continue to like the story at Greggs and valuation is supportive at c 8x EV/EBITDA for FY15e.Greggs is a bakery food on-the-go retailer. Co. provides a range of fresh bakery goods, sandwiches and drinks in its shops. Co. also provides frozen bakery products to its wholesale customers. As of Dec 31 2016, Co. had 1,764 shops in operation Co. had 157 franchised shops operating in travel and other convenience locations, with a particular focus on motorway services and petrol forecourts. Co.'s Balanced Choice products provide choices from a selection of freshly prepared sandwiches, wraps, salads, yoghurts, hot soups, porridge pots and freshly baked savouries.
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