The recent launch of Greggs PLC’s (LON:GRG) vegan-friendly sausage roll has helped send sales at the high street baker soaring in the opening weeks of 2019.
Last month, the FTSE 250 group released its vegan sausage roll which went viral and even made an appearance on national daytime TV when Piers Morgan tried it live on air.
READ: Greggs lifts profit guidance again
At the time, analysts praised Greggs’ PR team for showing itself to be “extremely smart and nimble”.
The additional publicity is being reflected in sales, with like-for-likes, which exclude new store openings, up 9.6% in the seven weeks to 16 February. Total sales have jumped by 14.1%.
Bosses said on Tuesday that Greggs has made “an exceptionally strong” start to the year, so much so that profits in 2019 will likely top previous estimates.
“The performance builds on the strong finish to 2018 and has been supported by extensive publicity surrounding the launch of the vegan-friendly sausage roll at the start of January,” read a brief update.
“As a result, customer transaction numbers have increased, with additional sales mainly comprising savoury products such as the vegan-friendly sausage roll and our other iconic sausage rolls and bakes.
Really enjoyed the Greggs vegan ‘sausage’ roll. ???????????????????? pic.twitter.com/TigxlUdguU
— Piers Morgan (@piersmorgan) January 7, 2019
“The rate of growth has eased slightly in February, but the strength of trading is likely to have a material impact on the first half result for 2019, particularly as comparative sales growth for 2018 was weak due to the extreme weather.”
It concluded: “Overall the board now anticipates that 2019 full year underlying profit before tax is likely to be ahead of its previous expectations.”
Despite many retailers struggling due to weaker high street footfall and lower consumer confidence, Greggs has managed to buck the trend, lifting its profit guidance three times now in as many months.
Bringing home the bacon
“The new vegan sausage roll has helped bring home the bacon for Greggs, prompting a spike in sales at the start of this year,” said Hargreaves Lansdown analyst Laith Khalaf.
“It’s unclear how much of the boom can be attributed to sales of actual vegan rolls rather than simply the publicity associated with the launch. However, catering for vegan diets is now rising up the priority list for many food retailers, with M&S recently launching its new vegan range, Plant Kitchen.
“This isn’t just a flash in the pan for Greggs either, it builds on strong performance last year, and demonstrates it’s still possible for bricks and mortar retailers to earn a crust on the UK high street. Last year total sales rose by 7.2%, and the baker opened around 100 net new outlets.”
He added: “Share price performance has also been strong, and has trebled in the last five years. A fair amount of growth is already baked into market expectations though, with Greggs trading at a fairly hefty 21 times earnings.”
Greggs shares rose 6.9% to 1,713p on Tuesday.
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