Greggs PLC (LON:GRG) shares hit all-time highs on Tuesday after the sausage rolls seller lifted its full-year expectations once again following an “exceptional” start to the year.
This latest guidance upgrade, the fourth in five months, took shares above 2,000p for the first time ever. In early deals, the stock was up 12.5% to 2,014p.
READ: Greggs to pay special divi after record 2018
Total sales rose 15.1% in the opening 19 weeks of 2019, while like-for-like sales climbed 11.1%.
Most high street retailers and restaurants would kill for that sort of growth, with most of them struggling of late to get customers to part with their cash.
Greggs said the sales boom it has enjoyed so far this year has been helped by the roll-out to all stores of its vegan sausage rolls, demand for which has outstripped supply.
Sales of its breakfast items are “continuing to grow strongly” as well, as is the post-4pm meal deal, which offers a slice of pizza and a drink for £2.
It’s not just savoury foods that are doing well; Greggs, which now trades from 1,969 stores, said its doughnuts and cakes remain popular too.
Profits to be “materially higher”
“The exceptional level of like-for-like sales growth that began in January has been sustained in the months that have followed, driven by increased visits to our stores,” read a statement.
“Looking forward, the sales comparatives from 2018 become progressively stronger but we now anticipate materially higher sales for the 2019 year as a whole than we had previously been expecting.”
Bosses added: “Whilst there have been some increases in input costs, we expect overall cost inflation to be broadly in line with our plans for the year.
“Taking all this into account, the board believes that underlying profits (before exceptional costs) for the year will be materially higher than its previous expectation.”
Greggs is on a (vegan sausage) roll
“Since the company launched its vegan-friendly snack in January 2019 it has upgraded guidance several times, unveiled a special dividend and added around £700mln to its market value,” said AJ Bell investment director Russ Mould.
“This is not the only reason like-for-like sales have been shooting the lights out at Greggs; investment in the range and quality of products it sells in recent years has turned it from a humble budget baker to a food-on-the-go destination for busy consumers.
“The company is also doing a lot of the right things in the background, allocating capital to its manufacturing capabilities, improving its distribution infrastructure and getting a handle on back-office functions.
“There is a danger that expectations are being raised too high by the current period of impressive growth, however there is nothing the company can do about that, all it can do is keep plugging away.”
--Updates for share price and analyst comment--