Greggs expects to post a 40% rise in first half operating profit after sales rose by 3.1% during the period, the baker announced in a trading update this morning.
Greggs said that total sales for the 26 weeks to 28 June grew by 3.1% (3.2% on a like-for-like basis), driven by improvements in “products, availability, service and value”.
The company said that following the rise in sales, coupled with tight cost control and the benefit of property disposal profits, it expects to show operating profits of around £16-17m when it reports its interim results at the end of the month. Last year Greggs posted an operating profit of £11.5m.
However, Greggs added that the year-on-year performance in the first six months of 2014 benefits from comparison with a period of “weak trading” in 2013 when like-for-like sales fell by 2.9%.
The company said: “Sales comparables strengthen in the second half although the risk of further input cost inflation appears to be reducing. Overall, we expect to deliver an improved financial result for the year and further progress against our strategic plan.”
Shore Capital analyst Darren Shirley commented: “We are encouraged by the momentum increasingly evident across Greggs since the very poor trading performance through H1 2013… We remain comfortable with our FY2014 LFL forecast of +2.5%.”
During the year Greggs opened 26 new shops and closed 36 shops, giving a total of 1,661 outlets.
Greggs shares rose by almost 15p (2.8%) to 550.95p today after the announcement.