Greggs' (LON:GRG) interims show a company in balance in several ways. First, operational and site development initiatives are driving consistent sales growth despite a challenging market. Second, the balance between low-price value and perceived quality is allowing it to cover peak input cost increases without a serious impact on margins. Third, the financial model is operating to support the dividend with a stable balance sheet.
Reassuringly good trading in the first half
Total sales grew 7.3%, and like-for-like sales grew 3.4%, comparing well against FY16. Operating profit pre-exceptionals and property profit, at £27.6m, was slightly ahead of H116, against flat guidance for FY17. Gross margin improved 10bp over a year ago, reflecting successful pricing and menu mix action counteracting peak ingredient inflation of 7%. Overall, pre-exceptional operating profit was only down 5% at £27.9m because of last year’s abnormal property gains.
To read the entire report Please click on the pdf File Below: