RE: Trading update29 Sep 2020 07:56
Greggs facing undercooked demand?
A trading update Greggs PLC (LON:GRG) should see the Newcastle-headquartered baker detail how it is adjusting to the lack of commuters and office workers, a key part of its customer base, who often grab a quick pasty in between work and home.
This hole in its customer base means the FTSE 250 group may have to step up its marketing efforts, such as the recent 10,000 free sausage rolls offered to university students.
While the company had something of an ugly first half, swinging to a £62.2mln operating loss from a £39.9mln profit last year due to its outlets being closed during the UK’s lockdown, sales rebounded strongly following reopening in July, which should make the numbers in this coming third-quarter update a bit more positive.
Moreover, the latest restrictions encouraging people to work from home could put a steak-brake on any recovery, and investors are therefore likely to look for any news on how the firm will handle what is shaping up to be a difficult winter.
One saving grace could be the digital front, where Greggs has begun to sausage-roll out a click-and-collect service while deliveries of its products can also be ordered on the Just Eat app in various cities.
With the group needing at least 80% of 2019’s sales to break even, shareholders will want to see fast action otherwise their enthusiasm for the stock could cool quickly.
https://www.proactiveinvestors.co.uk/companies/news/930141/greggs-and-hotel-chocolat-on-the-menu-for-tuesday-930141.html