In an economic climate where many companies are raising prices to combat inflation, Greggs has decided to keep their prices stable. Despite a slower third quarter, the bakery chain maintains an optimistic outlook.
CEO Roisin Currie confirmed that there are no plans for further price increases this year, as costs are stabilising faster than expected. This decision comes amidst a complex backdrop of economic factors affecting sales.
Stable Prices Amidst Inflation
Roisin Currie, the CEO of Greggs, has stated unequivocally that there would be no further price hikes for this year. She noted that costs are stabilising faster than anticipated, a relief in a market burdened by inflation.
Earlier in the year, Greggs had to increase prices, including a 5p rise in the cost of their signature sausage roll, largely due to inflation driven by rising wages. Currie indicated that future price increases might be discussed next year, particularly in response to statutory minimum wage hikes.
Sales Impacted by External Factors
Despite stabilising costs, Greggs experienced a sales dip over the summer, resulting in a 5.8% drop in its share price, bringing it down to £29.42. It is noteworthy, however, that their stock has gained over 20% in the past year.
Currie attributed the weaker sales in July and August to several external factors, including poor weather, economic uncertainty, and civil unrest in key cities that adversely affected some stores.
Rebound in September and Optimism Ahead
Sales showed improvement in September as employees returned to workplaces, reflecting a positive shift in consumer behaviour.
Greggs is poised for future growth with the launch of its autumn menu, featuring seasonal favourites such as pumpkin spice lattes and a new pumpkin spice doughnut.
The company continues to expand its footprint, now boasting over 2,500 outlets nationwide, with ambitious plans to open up to 160 net new shops this year.
Expansion and Strategic Partnerships
Greggs is not only broadening its physical presence but also expanding its reach through strategic partnerships. The company is increasing its presence in supermarkets, petrol stations, and travel hubs, ensuring greater accessibility for customers.
Furthermore, Greggs has expanded its delivery partnerships with Uber Eats and Just Eat, reflecting a strategic move to capture the growing demand for food delivery services.
Analysts’ Positive Outlook
Industry analysts remain optimistic about Greggs’ long-term growth prospects. Some forecasts predict a 10% increase in pre-tax profits for the year, a significant figure given the current economic climate.
This positive outlook is underpinned by Greggs’ strategic initiatives and resilient business model, which have persistently driven performance.
Future Challenges and Considerations
While Greggs remains optimistic, future price increases may still be on the table, particularly if statutory minimum wage increases are implemented next year. This could potentially impact the company’s cost structure.
However, Greggs’ adaptability and strategic planning indicate that it is well-positioned to navigate these challenges successfully.
Conclusion
Despite a challenging third quarter, Greggs’ commitment to stable prices and strategic growth initiatives has fortified its position in the market.
With comprehensive plans for expansion and a positive outlook from analysts, Greggs is well-prepared to tackle future challenges.
Greggs’ strategy to hold prices steady while navigating a complex economic landscape demonstrates its resilience and forward-thinking approach. The company’s proactive measures and strategic partnerships underscore its commitment to sustained growth.
The favourable outlook from analysts further validates Greggs’ strategic direction, making it a noteworthy player in the competitive bakery industry.
