Bakery and coffee chain Greggs PLC (LSE:GRG)’s sales have been chugging along nicely so costs will be the main focus in next week’s third-quarter update.
The last update in August revealed softer profit margins, though it was suggested that input price inflation was easing a little from 11% in the first half to a predicted 7% over the remainder of the year.
If that is confirmed next week, the shares might get a bump, especially if there is any indication things have improved.
Working from home remains an issue with many possible customers still reluctant to return to the office, but initiatives such as click-and-collect, loyalty apps and later openings should be an offset.
Analysts at Peel Hunt noted that the market was "surprised by both the lack of upgrades, and a higher than anticipated softening of PBT margins in the August interims", which had been reflected by the recent reversal and slowdown in share price momentum.
"This being said, we expect Greggs to have now made good progress on its PBT margins, with trading momentum reportedly strong at the start of the quarter and further tailwinds from commodity pricing in key ingredients being flagged to come through over the half."
Currently, Greggs has around 2,380 outlets with 94 opened in the first half and a target of 150 new stores for the whole year.
Longer term, UBS says Greggs has a "highly attractive business" thanks to its unique combination of growth opportunity, defensive position and continuing strong execution.
The Swiss bank’s forecasts are for profits this year to end December of £169 million on revenues of £1.8 billion.