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A strengthening picture

Update | Food & Drink | 04 Oct 2017

Greggs’ strong sales quarter reflects its secure place in the value sector of an increasingly edgy retail market. But it is also driven by a range of factors including menu development, estate upgrade, store ordering, and extensions to the range of dayparts and locations. With margins carefully controlled and wastage from the new ordering system starting to reduce, we expect those factors to continue to propel the company to outperformance within a constrained wider economy.


In balance

Update | Food & Drink | 09 Aug 2017

Greggs’ interims show a company in balance in several ways. First, operational and site development initiatives are driving consistent sales growth despite a challenging market. Second, the balance between low-price value and perceived quality is allowing it to cover peak input cost increases without a serious impact on margins. Third, the financial model is operating to support the dividend with a stable balance sheet.


Transformation taking shape

Update | Food & Drink | 03 Aug 2018

Greggs’ interim results, against a backdrop of extreme weather conditions, reinforce progress with the strategic transformation of the brand into a leading ‘food-on-the-go’ format. Innovative new product ranges, a reduced dependence on high street footfall and a major overhaul of the supply chain are creating a solid platform for the next stage of the journey. We forecast strong cash generation and a return to earnings growth in 2019.


Growth moderates, but strategy on plan

Update | Food & Drink | 10 May 2018

Greggs’ management has been open in recognising that despite the Beast from the East and other extraordinary weather patterns, there is an underlying softening of demand. We have reduced forecasts, but see earnings growth continuing from a combination of like-for-like sales, shop expansion, and investment in the estate and manufacturing and fulfilment infrastructure. Greggs’ value positioning should place it well in a tight consumer market, and at these levels the valuation is attractive.


Value discovery

Outlook | Food & Drink | 14 Mar 2018

Five years into its strategy, there is plenty for Greggs to do. Its shops, which all now look and work like value food-on-the-go outlets, must spread out from their high street origins. Its manufacturing bases are being transformed, at substantial projected returns. But most importantly, its wide-ranging food offer will take time to be known by non-customers, we believe. Their gradual buy-in should provide a tailwind to Greggs’ mission to gain share.


Positive outlook

Update | Food & Drink | 16 Jan 2018

Greggs' Q4 sales update demonstrates a robust performance in what has been a tough retail market. The company's self-help strategy shows that this is a business firmly in control of its own destiny. Management expects that the industry-wide cost pressures seen in 2017 will continue in 2018 although at lower levels. Greggs expects to deliver full year results in line with management expectations. A combination of strong trading momentum, easing margin pressures and continued self-help gives us confidence in our 2018 forecasts, which we leave unchanged.


Promising performance, strengthened proposition

Update | Food & Drink | 22 May 2017

Greggs has traded strongly for the first 19 weeks, and self-help measures such as refurbishments, openings, manufacturing rationalisation and product development continue to offer potential. Whether switching customers would be a net benefit in a consumer squeeze is uncertain, but the proposition is considerably stronger than when real wages were last negative. We retain our forecasts and valuation.


Successful strategy offers further potential

Outlook | Food & Drink | 06 Mar 2017

Given Greggs' long track record of strong cash generation and the success of the 2013 strategic plan to date, it seems reasonable to look beyond the short-term impacts of input cost rises and government-imposed cost increases to the benefits expected from the current investment programmes. Employing a DCF model to do precisely that, we generate a valuation of 1,226p per share.


Better-than-expected FY16

Flash note | Food & Drink | 17 Jan 2017

Greggs' trading update confirmed that it delivered a stronger than expected finish to FY16, leaving it well placed to face the margin pressures that will affect the entire industry in FY17. We expect only modest changes to FY17 estimates when FY16 results are released and therefore continue to value the shares at 1,189p.


In line with expectations

Update | Food & Drink | 12 Oct 2016

Greggs enjoys a differentiated position in the growing food-to-go market. Its strategy to enhance its offer and improve the efficiency with which it delivers that offer has yielded good results so far and remains on track. Although the industry faces input cost headwinds in FY17, Greggs has the financial strength to withstand them and the benefit of the continuing strategic initiatives to offset them.


Healthy H1

Update | Food & Drink | 03 Aug 2016

Greggs delivered a strong H116 trading performance and expressed confidence in the outlook for the year. The various elements of its strategy appear to be on track and have so far delivered the expected benefits. This reinforces confidence in the longer-term potential for the brand. Meanwhile it remains strongly financed and highly cash-generative. Our DCF valuation has increased by 2% to 1,179p.


On target

Update | Food & Drink | 11 May 2016

Greggs reports that, after 18 weeks' trading, it remains on target to meet full-year expectations. The range of business initiatives is on track and we are leaving our PBT estimates unchanged. Our valuation of 1,169p a share represents a slight increase from our previous valuation of 1,158p.