November 11, 2019 / 7:21 AM / a month ago

British baker Greggs bucks retail gloom with higher profit prediction

LONDON (Reuters) - Baker and takeaway food group Greggs (GRG.L) raised its profit forecast on Monday, lifting its shares and reinforcing its position as one of Britain’s few strongly performing retailers.

FILE PHOTO: Signage and logo are pictured outside a branch of Greggs in Liverpool, Britain, July 30, 2019. REUTERS/Phil Noble

While Greggs is thriving and expanding, many British retailers are closing stores due to rising costs and the shift to internet sales.

The stock rose as much as 14.2%, taking gains over the last year to 69%. This rise has been partly fuelled by the phenomenal success of Greggs’ vegan sausage roll.

Greggs shares fell last month after it said third quarter sales growth, though still robust, had slowed.

The firm, which trades from more than 2,000 UK retail outlets, said on Monday total sales grew 12.4% in the six weeks to Nov. 9. Like-for-like sales in company-managed shops were up 8.3%, having increased 7.4% in its third quarter.

Greggs said sales growth continues to be driven by more customers visiting its shops and has been stronger than it had expected given the improving comparative sales pattern it saw in the fourth quarter last year.

“Whilst the comparative sales become stronger still in the balance of the year, the board now anticipates that full year underlying profit before tax (excluding exceptional charges) will be higher than our previous expectations,” it said.

Prior to the update, analysts’ average forecast was a 2019 pretax profit of 109.7 million pounds ($140 million), according to Refinitiv data, up from 89.8 million pounds in 2018.

With Brexit unresolved and a Dec. 12 national election creating new uncertainties, many UK retailers are looking nervously at the months ahead.

Last week the 79-store British division of struggling baby products retailer Mothercare (MTC.L) collapsed into administration with the loss of over 2,500 jobs.

Shares in Greggs were up 251 pence at 2022 pence at 0846 GMT, valuing the business at 2.04 billion pounds.

Reporting by James Davey; editing by Kate Holton and Alexander Smith

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