Navigating Rising Costs and Expanding Horizons
rising wage costs. Despite a notable 7.4% increase in like-for-like sales during the first 19 weeks of the new financial year, CEO Roisin Currie acknowledges that "the majority of cost inflation pressures that we face this year is wages." This increase in labour costs is the company's biggest financial burden, with overall inflation for the year anticipated to be between 4% and 5%.
To navigate this challenge, Greggs is adopting a flexible approach to pricing. They are closely monitoring and reviewing price increases on a regular basis, adjusting their stance as needed. This approach allows them to remain responsive to ongoing economic conditions.
Despite the economic headwinds, Greggs continues to attract customers with its affordable products. The company has even surpassed McDonald's as the UK's most popular breakfast spot this year. This momentum is further fueled by an aggressive store expansion strategy, with plans to open between 140 and 160 new shops this year. These new locations will include outlets in supermarkets, petrol stations, and travel locations, expanding Greggs' reach and convenience for customers.
Analysts remain optimistic about Greggs' future, predicting a rise in pre-tax profit to £185 million for the year. While the past couple of months have seen a slight slowdown in like-for-like sales, analysts believe this will not significantly impact overall forecasts.
Greggs' ability to adapt to rising costs while maintaining its focus on expansion and affordability positions the company for continued growth and success. The company's commitment to providing value to its customers, coupled with its strategic expansion plans, ensures its place as a leader in the UK's bakery market.