Greggs shares surge over 8% as H1 profit jumps 20% to £76m

Greggs saw profit soar by 20 per cent after launching its chicken sausage roll.

Shares in Greggs soared on Wednesday as the bakery chain announced plans to reach at least 3,500 stores in the UK, following a jump in profit in the first half of the year.

The sausage roll purveyor reported a 20 per cent boost in pre-tax profit to £76 million in the six months to June, surpassing analysts' forecasts of £75 million.

Expansion Plans

The high street bakery's ambitions to reach at least 3,000 locations in the UK have raised eyebrows in recent years, as analysts questioned whether the already-ubiquitous chain had further room to grow.

However, Greggs doubled down on its expansion plans on Wednesday, telling shareholders that it has identified opportunities to reach an estate of at least 3,500 bakeries in the UK.

Greggs shares soared by more than eight per cent in early trading, to 1,826p.

Underrepresented Locations

Chief executive Roisin Currie said the bakery chain will pursue locations where it is currently "underrepresented," including:

• Retail parks
• Train stations
• Airports
• Roadsides

"There remains significant headroom for further growth," she said.

In towns and cities, Greggs plans to "optimise the distribution of shops" by relocating existing stores to "respond to local conditions," she added.

Managing Cannibalisation

The bakery said it is aware that new shops in busy areas risk "cannibalising" the sales of nearby locations, but noted it is monitoring customer behaviour to minimise this.

While only half of its new openings last year were in areas with no other Greggs within a mile, this proportion rose to 62 per cent for the 65 new shops opened in the first half of this year.

Greggs currently has 2,773 locations across the UK, and one overseas branch in Tenerife Airport. The chain plans to open more than 100 new bakeries this year.

Menu Innovation Driving Sales

The bakery chain said its new menu items – including a chicken sausage roll, a tandoori chicken pizza, and iced matcha – are boosting sales, which grew 7.2 per cent to £1.1 billion in the first half of this year.

Greggs' growing sales came despite "a challenging market characterised by subdued consumer confidence and increased uncertainty," Currie said.

The FTSE 250 firm said it is leaning into protein-rich and health-conscious food and drink in a bid to appeal to younger consumers.

"These launches reflect our focus on relevance and innovation, while staying true to the familiar quality that customers expect from Greggs," Currie said.

The group is also expanding its smaller store offerings, including its four "bitesized Greggs" shops and self-service coffee and sandwich machines.