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Greggs (LSE: GRG) shares flew 5.6% increased within the FTSE 250 right this moment (30 July) and with good cause. The excessive road baker simply reported that gross sales within the first six months of the 12 months had been almost £1bn!
At simply over £31, the share worth just isn’t far off an all-time excessive set again in December 2021. However how a lot would I’ve now if I’d invested 10 grand within the inventory on the flip of the 12 months? Let’s discover out.
Not peak Greggs but
Firstly, the outcomes that despatched the inventory flying right this moment had been very spectacular. For the 26 weeks to 29 June, gross sales totalled £960.6m, a 13.8% enhance on H1 2023. Underlying pre-tax revenue rose by 16.3% to £74.1m.
Like-for-like gross sales at company-managed outlets had been up 7.4%, effectively forward of the trade common.
In the meantime, it opened 51 web new outlets within the interval, taking the entire to 2,524 (of which 524 are franchised). It’s on observe to open 140-160 web new outlets in 2024.
Gross sales had been boosted by robust demand for pizzas and iced summer time drinks. And it simply launched a four-slice sharing pizza field, which is unhealthy information for my waistline with a brand new Greggs popping up 10 minutes from my home.
The icing on the cake for shareholders was an enormous 18.8% rise within the interim dividend, from 16p to 19p per share. I would deal with myself to a pizza field deal when that arrives in October!
Broadening buyer enchantment
The corporate is aiming for “significantly more” than 3,000 outlets over time. Certainly, it’s constructing out capability to assist as much as 3,500 outlets.
However the place would these go? I imply, each excessive road already appears to have no less than one Greggs.
Effectively, the corporate famous that “Greggs continues to be underrepresented [in] retail parks, railway
stations, airports, roadsides and supermarkets. We now have continued to develop our partnerships…with grocery store teams; opening 25 outlets with franchise companions, 5 with Tesco and three with Sainsbury’s“.
This technique is the suitable one as a result of footfall is declining on the excessive road (largely attributable to e-commerce).
One factor value highlighting is an increase in more healthy consuming within the UK. This danger might be exacerbated by GLP-1 weight-loss medicine like Wegovy, which might scale back cravings for fatty meals in some sufferers. This may impression the variety of folks popping into Greggs on a whim.
That mentioned, the corporate is about extra than simply sausage rolls nowadays. It sells varied coffees, salads, fruit pots, pasta, and rice bowls. There’s more and more one thing for everybody.
In step with that, Greggs continues to be the UK’s main food-to-go retailer, based on the YouGov Model Index.
Nonetheless, a premium price-to-earnings (P/E) ratio above 22 does counsel the inventory is totally valued. I’m completely satisfied to maintain holding for now.
That £10k funding?
The Greggs share worth opened the 12 months at 2,602p. As I write, it now trades for 3,102p.
This represents a achieve of 19.2%, greater than double the FTSE 250’s 9.1% year-to-date return. It means a £10,000 funding would now be value £11,920 on paper.
Additional, I’d have obtained a dividend of 46p per share in Might together with a 40p particular dividend. That will have added one other £330, bringing the entire return to £12,250.
