Greggs - Very tasty
Greggs’ FY19 PBT was 1% ahead of our expectations and current trading suggests it will continue to take market share in the growing food-on-the-go market. Greggs has many opportunities to accelerate growth in the medium term: more and larger stores; the shift from a single channel to multichannel; further product innovation; and more investment in its supply chain, funded by strong cash generation. There is near-term risk, as with the sector in general, if the coronavirus results in people staying away from public places. Our PBT forecast for FY20 increases by 2% and our DCF-based valuation increases by c 4% to 2,188p.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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