FUTURE PROFITS3 Oct 2019 18:54
GREGGS GRG
Q3 trading update
Continued strong like-for-like sales growth
With 2,009 shops, eight manufacturing and
distribution centres and 23,000 employees, Greggs
is the UK’s leading ‘food-on-the-go’ retailer. It uses
vertical integration to offer differentiated products at
competitive prices.
Total sales up 12.4% for the 13 weeks to 28 September 2019
The store openings are part of wider plans announced a few years ago that would see Greggs aim to open 100 stores a year. Chief executive Roger Whiteside told BBC Radio 4 Today Programme that the firm is equipped to open 2,500 in total.30 Jul 2019
Greggs plans to open several shops across the UK until 9pm, offering hot food, such as pizza slices. Most stores currently close between 6pm and 7pm.
“We want to try and do the same for evening as we did in breakfast. We weren’t in breakfast a few years ago and now we’re No 2 [in the takeaway market].” Only McDonald's sells more takeaway breakfasts
Greggs said it had also overtaken Starbucks to become the third-largest takeaway coffee seller, behind Costa and McDonald’s, while only Tesco sells more sandwiches.
Whiteside said the company had not reached “peak Greggs” and had several avenues for growth. More vegan products were in development, including a vegan doughnut, and plant-based “milks
increasing investment, bringing forward plans for robot-led automation at its pastry manufacturing site in Newcastle and developing ideas such as online ordering for collection and home delivery.
Ordinarily, most stores of Britain's much-loved bakery are open from early in the morning until between 5-7pm.
Greggs is at the start of trials for extended opening hours with c 60 stores open (from zero at the interims) until 9pm (6pm previously), which will extend to c 100 stores by the year end.
ME
60 STORES X EXTRA 3 HRS = 180 EXTRA BUSINESS HOURS A DAY LETS SAY 6 DAYS AWEEK
180 HRS X6 = 1080 EXTRA BUSINESS HOURS A WEEK MINIMUM AND THIS IS ONLY A TRIAL
FOR 60 STORES ,IF IT WORKS WE MAY SEE THE OTHER 840 ODD DOING THE SAME THING
AND WANT THAT IMPROVE THEIR PROFITS
SO TO ME THERE SHARE PRICE AT PRESENT LOOKS A BARGAIN
Valuation: No change to our DCF-based valuation
Our DCF-based valuation remains unchanged from 2,028p, which was updated at the interim results. This implies a P/E for FY19 and FY20 of 24.1x and 22.1x.
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