Greggs Reading store

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A recovery at Greggs has continued in the first quarter as like-for-like sales jumped 27.4% but the high street bakery chain warned of increasing cost pressures.

In a trading update this morning, the group reported total sales for the 19 weeks to 14 May of £495m, compared with £378m a year ago.

Greggs highlighted that the growth at its company-managed shops were flattered by comparison with the restricted trading conditions in 2021.

Since the business reported its full-year results for 2021 back in March - when it bounced back into the black - like-for-like sales growth in the most recent ten weeks to 14 May averaged 15.8%.

Greggs pointed out this period lapped the time when lockdowns in 2021 were beginning to ease and added it expected the growth figure to continue to normalise as comparisons started with the more robust trading periods of last year.

Sales levels in larger cities and in office locations continued to lag the rest of the estate but transport locations had shown a marked increase in activity in recent weeks, Greggs said in the update.

Sales of hot food and snacks were showing particularly strong growth, with chicken goujons and potato wedges proving popular, the group added.

“We have made a good start to 2022, with sales in line with our plan and a strong pipeline of new shop acquisitions ahead,” the statement to the London Stock Exchange said.

However, Greggs continued to highlight the difficulties caused by the ongoing inflationary environment.

“Looking ahead, market-wide cost pressures have been increasing and consumer incomes will clearly be under pressure in the second half of the year.

“We will continue to work to mitigate the impact of cost pressures whilst protecting Greggs’ reputation for exceptional value.

“Whilst considerable uncertainties remain, we are in line with our plan and the board’s expectations for the full year outcome remain unchanged.”

Greggs opened 49 new shops, including 18 with franchise partners, in the first quarter, while it closed six.

Shares at the group slumped 2.8% to 2,110p as markets opened this morning despite the headline growth.

Morning update

The FTSE 100 started the week in the red, falling 0.7% to 7,368.63pts.

Early fallers in food and drink besides Greggs include Bakkavor Group, down 3.9% to 101.9p, Devro, down 3% to 195p, and Just Eat Takeaway, down 2.2% to 1,619.6p.

There were very few early risers in the sector this morning, with Irn-Bru maker AG Barr up 0.7% to 573p, Diageo up 0.4% to 3,840p and Compass Group up 0.3% to 1,814p.

This week in the City

Tobacco giant Imperial Brands and drinks group Britvic are set to report first-half results tomorrow, while Greggs holds its AGM.

The latest UK inflation figures are due out on Wednesday as the cost-of-living crisis continues to worsen, with the Bank of England warning inflation could reach 10% by the end of the year.

Fever-Tree Drinks holds its AGM on Thursday.

Logistics firm Wincanton reveal full-year figures on Friday morning alongside the latest monthly GfK consumer confidence index and ONS retail sales figures for April.