In This Article:
Release Date: March 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Greggs PLC (GGGSF) achieved record sales of over 2 billion pounds in 2024, marking an 11% total sales growth.
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The company reported a strong profit delivery with underlying pre-tax profits of 189.8 million pounds, a growth of 13.2%.
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Greggs PLC (GGGSF) opened 226 new shops in 2024, resulting in a net growth of 145 shops, with a healthy pipeline for future openings.
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The evening sales strategy is progressing well, now representing 9% of company-managed shop sales, and delivery sales have grown to 6.7% of sales.
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The Greggs app has seen significant growth, with 1 in 5 transactions now scanned through the app, enhancing customer engagement and data collection.
Negative Points
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The trading environment in 2024 was challenging, with low consumer confidence and a static physical market in volume terms.
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Greggs PLC (GGGSF) faces significant inflationary pressures, particularly in wage costs, with an expected 8% wage inflation in the coming year.
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The company anticipates a 6% overall cost inflation for 2025, driven by wage and energy costs.
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Greggs PLC (GGGSF) is entering a peak investment phase, with capital expenditure expected to reach 300 million pounds, impacting cash flow.
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The company is experiencing higher administrative expenses due to increased investment in technology and ERP systems.
Q & A Highlights
Q: Can you provide more details on the strategic growth drivers and how they are impacting Greggs' performance? A: Roisin Currie, CEO, highlighted that Greggs' strategic growth drivers include menu innovation, expanding shop locations, and enhancing digital channels. The introduction of new products like the over-a-drinks range and hot wraps has been successful. The company continues to open new shops, with a focus on underrepresented areas, and is investing in digital capabilities to enhance customer engagement and sales.
Q: How is Greggs managing cost inflation, particularly in terms of wages and food costs? A: Richard Hutton, CFO, explained that Greggs is experiencing cost inflation, especially in wages, with an expected 8% increase. The company is managing this through strategic pricing and cost recovery measures. Food and packaging costs were slightly deflationary last year, and they expect single-digit inflation in the coming year. Greggs aims to maintain its value proposition despite these pressures.
Q: What are the plans for expanding Greggs' shop network, and how are new locations performing? A: Roisin Currie stated that Greggs plans to open 140 to 150 new shops in the coming year, with a focus on areas where they are underrepresented. New shops are delivering strong returns, typically achieving a 25% return on investment within two years. The company is also relocating and refurbishing existing shops to better serve customers and enhance sales.