Greggs IMS

The leading bakery retailer in the UK, with almost 1,700 retail shops throughout the country.  I have a holding in my income portfolio (epic code: GRG).

Greggs released their 3rd quarter IMS today, declaring that total sales grew by 3.6% year-on-year in the 13 weeks to 28 September 2013, driven by net new shop openings and continued growth from franchised shops.

Like-for-like sales were down 0.5% in the 13 week period, an improvement on the 2.9% decline seen in the first half of the year and on the 3.2% fall in the first 5 weeks of the third quarter.

Total sales for the 39 weeks to 28 September 2013 increased by 3.5%, with like-for-like sales down by 2.1%.

Although cautious, management are encouraged by the recent improvement in like-for-like performance. So with cost inflation in line with their expectations, the outlook for the full year is unchanged.  Expectations are for EPS to be in the range of 30.6-31.6p. 

 

This is a marked improvement in performance compared to the first 6 months and along with the investments being made in shop refits (13% of company owned estate to be completed by the year-end), processes and system replacements (see here) next year should show some early improvements in profits.  Although I do fear that the current dividend level will not be increased until free cash flow is improved, which with the current investment programme is unlikely to be before 2015.