The shares of Greggs (LSE: GRG) rallied by 3% to 440p this morning after the FTSE 250 mid-cap revealed its summer like-for-like sales had fallen less harshly than first expected.
The bakery chain’s total sales grew by 3.6% compared to last year, driven by new store openings. After same-store sales dropped by a disappointing 2.9% in the first half of 2013, the market was cheered by a less-dramatic 0.5% decline between July and September.
Greggs continued to refurbish its stores over the summer, with 141 shops redecorated since the start of 2013. The company expects to have refitted 13% of its store base by the end of the year, and management claims that customers are enjoying the new format.
Commenting on the results, Mr Whiteside added:
“We are encouraged by the recent improvement in like-for-like performance, although with consumer disposable incomes still under pressure we remain cautious. Cost inflation is in line with our expectations and the group’s cash position remains strong. Our overall outlook for the full year is unchanged.”
With a market cap of £439m, Greggs’ shares trade at 14 times expected earnings, and offer a prospective dividend yield of 4.5%.
Of course, whether that valuation, today’s statement and the future prospects for the bakery industry all combine to make shares of Greggs a ‘buy’ remains your decision.
