Greggs sales recovery since May 10 'stronger than expected'

High Street bakery chain Greggs has reported a stronger than expected recovery in sales from the Covid pandemic since early May which could have a "materially positive" impact on annual earnings.

The company reported like-for-like growth of 1%-3% since its last trading update on May 10 compared with the same period in 2019 before the crisis began.

“This level of sustained sales recovery is stronger than we had anticipated and, if it were to continue, would have a materially positive impact on the expected financial result for the year,” Greggs said on Monday.

The company, known for its popular vegan sausage rolls, said it had expected to see increased competition as cafes and restaurants were allowed to compete more effectively with its range of takeaway foods as lockdown restrictions were eased.

“In recent weeks the impact of pent-up demand for retail has reduced but, nonetheless, like-for-like sales growth in company-managed shops has remained in positive territory ranging between 1% and 3% when measured against the same period in 2019,” Greggs said.

AJ Bell investment director Russ Mould said the "lure of Greggs’ famous sausage roll has proved strong enough to make it the ‘food on the go’ retailer of choice for so many individuals".

“Movement of people either by foot, public transport or car is key to Greggs’ success. It has outlets strategically located in transport hubs, motorway service stations, shopping locations and offices. Greggs could do well given its affordable prices and formula for having attractive products and ability to appeal to customers throughout the day," he said

Mould noted that management was not "shouting from the rooftops" despite better-than-expected trading.

"That’s the correct stance to take as there is still a lot of uncertainty across the UK. It also isn’t clear how much of the commuter trade will return as so many companies still haven’t decided on their new working location strategies.”