CashNews.co
Bakery chain Greggs (GRG.L) said September was its strongest month of the third quarter amid fresh additions to its autumn menu, but that still wasn’t enough to stop sales softening overall in that period.
A pumpkin spice doughnut, a Mexican bean and spicy cheese flatbread, as well as an all-day breakfast baguette were among the items added to the Greggs autumn menu, which launched on 29 August.
The food-on-the-go chain also launched a new pizza option, BBQ Chicken, and said its pizza sharing boxes were available in four- and six-slice boxes.
Greggs said September marked its strongest month of the third quarter, in a trading update released on Tuesday.
However, while Greggs reported continued sales growth, this latest update showed some slowdown. Like-for-like sales grew by 5% in the third quarter, though this was slower than the 7.4% it recorded in the first half and below growth of 6.5% year-to-date.
Greggs shares were down 4.5% following this latest update, though the stock is still up nearly 15% year-to-date.
Read more: Trending tickers: Apple, Greggs, Stellantis and Super Micro Computer
The company said the growth that it did see in the third quarter was supported by its “menu development and further progress in extended trading hours and new digital channels”.
Greggs said that while it was “acknowledging ongoing economic uncertainty, the board expects the full year outcome to be in line with its previous expectations”.
In addition, the bakery chain said it now expected the level of cost inflation to be towards the lower end of the 4-5% it previously forecast.
Russ Mould, investment director at AJ Bell, said: “Greggs has pursued multiple avenues to achieve growth in recent years, including home delivery, evening trading and a successful move into vegan products, but there are some signs in its latest update that it may need to pull another rabbit out of the hat.”
He said that the company was “not resting on its laurels” with continued innovation in its product range and an “ambitious store roll-out programme”.
Read more: FTSE 100 LIVE: European markets mixed as Israel starts ground invasion in Lebanon
Having already opened a net 86 new shops so far this year, which includes closures and relocations, Greggs said it was on track to meet its target of opening between 140 and 160 net new stores for 2024.
Openings in the third quarter included two drive-throughs in Bristol, at Abbeywood Retail Park and Harlequin Business Park.
However, Mould said the “nagging question for investors is when does Greggs hit saturation point?”
“Greggs’ heavy investment in infrastructure to support further outlets suggests it sees continuing scope for growth for some time to come, and an excellent track record going back decades means it is likely to be afforded some trust by shareholders,” he said.
“However, achieving the scale of expansion which Greggs has outlined will not be easy and there could be some speed bumps along the way.”
Download the Yahoo Finance app, available for Apple and Android.