Greggs has reported an almost 50% rise in pre-tax profit after diversifying its product range during the first half of the year.
The bakery chain reported a 3.2% rise in like for like first half sales, while pre-tax profit rose 48% to £16.9m from £11.4m in the first half of 2013.
Greggs benefited from weak comparative figures for the same period last year (when like for like sales fell by 2.9%). It said that weaker comparables also helped boost sales into July as the country has not experienced the widespread heatwave conditions that depressed sales last year.
Roger Whiteside, chief executive, said: “Whilst our year-on-year performance has benefited from comparison with a period of weak trading in 2013, sales growth is also being driven by initiatives that have further improved our products, availability, service and value. Our new and improved coffee blend and sandwich range are great examples of this.”
Greggs said it had seen strong sales growth after refreshing its coffee range in 2014, while it has also launched a new range of freshly made sandwiches and extended its meal deals during the period.
Greggs admitted that trading conditions in the first half of 2014 were more favourable than last year. The weather has been more settled, general economic indicators have been more positive and it has benefitted from low commodity price inflation.
Outside of normal trading operations, Greggs made a property profit of £1.4m but took exceptional costs of £8.3m after closing in-store bakeries and restructuring support functions.
Whiteside added: “Although sales comparables strengthen in the second half the risk of 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.”
Analysts at Shore Capital said the results “exceeded our expectations”.
A Shore Capital note this morning stated: “Greggs is engaged in a period of focus and self-improvement under CEO Roger Whiteside that has beaten our expectations and impressed us.
“During H1 the group states that it has benefited from more favourable trading conditions and relatively easy comparatives. However, to our minds it is also true to point out that the group has positioned itself better to reap the rewards from these evolving market conditions.”
Greggs shares were up 4.4% to 522.2p in early trading. The shares have risen by over 20% since the start of the year.
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