2017 saw the popular bakery chain post the kind of chart investors can only dream of. Starting at £9.63 the stock saw a near-uninterrupted, steak bake fuelled climbed, eventually closing out the year at an all-time high of £13.96 – that’s a 45% rise across 12 months. It’s lost some of its shine since 2018 began, however, with the stock at one point touching a 4 and a bit month low of £12.58. Greggs (LON:GRG) now sits at a current trading price of £13.11.
January’s fourth quarter update provided a nice little summary for why investors have been so keen to tuck into Greggs for the last year or so. For the 52 weeks to the end of December the firm saw its total sales jump 7.4%, with company-managed shop like-for-likes up 3.7% (down on the 4.2% comparable sales growth seen the year previous, and was just 3.0% in the fourth quarter).
After a net addition of 90 new openings in 2017, taking its estate to 1854 stores, Greggs said it would ramp up its expansion in 2018, targeting an extra 110 to 130 locations. CEO Roger Whiteside also said the company will likely start selling vegan products, expand its hot food options and increase the number of drive-through sites.
It wasn’t all good news, however. The company stated that it expected ‘industry-wide cost pressures to continue in the year ahead’, though at a lower level than in 2017. That’s a problem, as Greggs will be reluctant to pass on these extra costs to customers given one of its main selling points is its comparative cheapness.
In terms of Tuesday’s annual results, the focus will likely be on how much those aforementioned cost pressures affected the company’s bottom line across its financial 2017.
Greggs has a consensus reading of ‘Hold’ alongside an average target price of £13.20.
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