For the lunchtime staple, 2017 was the kind of year investors can normally only dream of. At no point did the stock really look like it was going to slow down. From a starting price of £9.43, Greggs eventually closed the year at an all-time high of £13.91 – that’s a near 48% rise across the 12 months.
Yet 2018 has been almost the opposite. Almost from the off the stock began to slide, eventually hitting a 6 month low of £11.68 towards the end of March. Though it has lifted a bit since then, at a current trading price of £12.31, Greggs is still a way off where it was at the start of the year.
While it was falling before the end of February’s full year results, a large chunk of the firm’s losses came in the aftermath of those numbers. Yet there was a lot to like: total sales surged 7.4% to £960 million, in no small part thanks to the 90 net openings seen over the year, with an equally robust 3.7% jump in company-managed like-for-like sales (though that was down on 2016’s 4.2%).
A highlight was the continued success of its ‘Balanced Choice’ range, which now accounts for more than £100 million of sales. It also announced that it would launch new stores in London Underground stations, a savvy move designed to target busy, hungry commuters, with the first opening at Westminster.
The statement was slightly tainted by the fact pre-tax profit dropped 4.2% to £71.9 million, largely due to a £10 million charge related to the costs of overhauling its supply chain. But even then the company still lifted its annual dividend 4.2% to 32.3p.
In terms of Wednesday’s trading update, the company stated back in February that like-for-like sales for the first 8 weeks of 2018 had risen 3.2%. Investors will want to see an improvement on that figure, given it represents a further deceleration in growth.
Greggs(LON:GRG) (LON:GRG) has a consensus rating of ‘Hold’ alongside an average target of £13.15.
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