Greggs - Medium-term growth ambition quantified
Gregg’s Q321 trading statement (to 2 October) indicated improved revenue momentum despite recent supply chain and staffing disruptions and an increase in FY21 profit expectations, although rising inflationary pressures (ingredients, staff and utilities) are expected from Q421. This suggests a more challenging FY22 from a cost perspective. Management set a new ‘ambitious’ five-year target (to the end of FY26) to double revenue to £2.4bn (CAGR of 14–15%) from an equal combination of accelerated space growth (number and average size of stores) to reach at least 3,000 stores and space productivity from both ongoing (delivery and evening day part) and new (enhanced loyalty and marketing) initiatives. Simply put, the ambition is to extend Greggs’ strength from daytime retail to an all-day multichannel. Our forecasts are under review.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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