The end of the summer heatwave has brought relief to bakery chain Greggs after sales wilted in the scorching temperatures of June and July.
The company’s shares leaped more than 8% as the company told shareholders trading had picked up in cooler August and September. Even so like for like sales in company managed shops in the 13 weeks to 27 September grew by just 1.2% compared with 2.2% for the year to date.
Chief executive Roisin Currie said she felt “much more positive about sales” after the return of more normal summer weather in August.
She said: “When it gets to about 25 degrees you start to see customers eating less, but when it gets to 30 degrees everything is completely different, you see people out in pub gardens and parks and they just want to drink not eat.”
Greggs opened its first ever pub, the Golden Flake Tavern, in Newcastle last month.
Overall sales were up 6.1% in the quarter and 6.7% for the year to date, the company said in a third quarter trading update.
Investors were also encouraged by the what the company described as a “marginally improved outlook for cost inflation” after wholesale prices for commodities such as flour did not rise quite as fast as predicted.
But Currie said consumers still felt “very uncertain” and disposable incomes were “still under pressure.”
The new autumn menu includes a “Big Deal” meal deal which offers any sandwich or salad, a drink, and a side from £5.
Other seasonal launches include Pumpkin Spice Latte, Pumpkin Spice Doughnut and Toffee Fudge Muffin as well as the return of the Vegan Lattice (Steak-Free) bake.
In the year to date Greggs has opened a net 57 shops bringing the total to 2,675. New sites include Ludgate Hill in the City with a new branch on Aldgate also in the Square Mile due to open in the coming weeks. Currie said London and the south east continues to be a big part of the plan”
Matt Britzman, senior equity analyst, at investment platform Hargreaves Lansdown said: “Even sausage rolls are sweating as Greggs feels the heat. Hot weather and a softer consumer backdrop meant third-quarter growth slowed, raising question marks around expectations for the full year.
“Management isn’t waving the white flag just yet, with the full-year outlook unchanged. But this quarter was about weathering the bumps rather than breaking records - a far cry from the Greggs of 2024.”
Dan Coatsworth, head of markets at brokers AJ Bell, said:“The fact life hasn’t got any worse for Greggs was enough to breathe some life into the share price. It says trading has improved over the past few months, it is getting cost pressures under control, and full-year guidance has been maintained.
“Don’t be fooled into thinking the king of sausage rolls is sitting upright on its throne, with nothing to worry about. The share price jump is a mixture of relief and a short squeeze, not a celebration of significant progress.
“Like-for-likes sales are still pedestrian despite ongoing product innovation that should have drawn in the crowds. There is a nagging feeling that Greggs is growing too fast in the face of fierce headwinds.”
