British baker and fast food chain Greggs has maintained its full year outlook, though its underlying sales growth did slow in its latest quarter, reflecting a "challenging" market and sending its shares lower.
Chief executive Roisin Currie highlighted recent surveys showing UK consumer confidence had plunged in the wake of Prime Minister Keir Starmer's warnings about the state of the British economy and the likely need for tax increases in an October 30 budget.
"That's just the uncertainty out there. When there's any switch in political regime people are just unsure what the future might bring," she told Reuters in an interview.
"We win in that market because people are still seeking value," she said.
Greggs, famous for its sausage rolls, steak bakes and vegan alternatives, has proved a resilient performer through Britain's cost-of-living crisis.
It said company-managed shop like-for-like sales rose 5% in the 13 weeks to September 28, its fiscal third quarter, having been up 7.4% in the first half.
Currie said unhelpful weather in July and riots in August weighed on sales. September was, however, a stronger month, and she is optimistic Greggs will have a better fourth quarter.
"While there's uncertainty, there's also lots of reasons to be confident," she said, noting rising wages, falling inflation and still high employment.
Currie said Greggs has no plans for further price rises in 2024.
As well as new stores, Greggs's growth is being supported by an expansion of its product range, such as new pizza and doughnut options, longer opening hours into the evening, increased sales through deliveries and building loyalty with the Greggs App.
So far this year, it has opened a net 86 shops, including 43 relocations, taking the total to 2,559 shops. In May, Greggs said it was building capacity for a store estate of around 3,500.
"Whilst acknowledging ongoing economic uncertainty, the Board expects the full year outcome to be in line with its previous expectations," Greggs said.
Before today's update analysts were on average forecasting a 2024 underlying pretax profit of £187m, according to LSEG data, up from £168m in 2023.
Meanwhile, Greggs is relaxed about the UK's government's plans to give workers more rights and greater certainty over their hours and pay, its boss said today.
"There is nothing in the employment rights bills that I would say we are worried about," CEO Roisin Currie said in an interview.
"I think it's all about trying to make sure that people are well looked after in the workplace," she said.
Greggs employs about 32,000.
