Greggs Pretax Profit, Revenue Rise; Confident About Inflation Pressure, Year Ahead

Greggs, the UK's leading bakery chain, has reported a significant increase in pretax profit and revenue for the year ended December 29, 2024. The company's strong performance, driven by expansion and operational efficiency, has positioned it to manage inflationary pressures and maintain growth in the coming year.

Greggs' pretax profit for the year was 203.9 million pounds ($259 million), up from 188.3 million pounds in 2023. Revenue rose to 2.01 billion pounds ($2.55 billion) from 1.81 billion pounds in the previous year. The company's total sales grew by 11% year-on-year, with like-for-like sales in company-managed shops up 5.5% compared to the prior year.

The company's growth can be attributed to several key factors:

1. Expansion of Store Estate: Greggs has been actively expanding its store estate, with a target to reach 3,000 shops by 2026. In 2024, the company increased its store count to 2,618, adding around 150 shops. This expansion strategy helps Greggs reach more customers and increase sales, contributing to profit growth.
2. Extended Opening Hours and Delivery Services: Greggs has been extending opening hours in some shops and rolling out delivery services, which have driven sales growth. In 2024, excluding the impact of new openings, sales grew 5.5% compared to the prior year, reflecting these initiatives. This aligns with the company's strategic objective to grow in newer dayparts and channels.
3. Price Increases: Greggs has raised prices on some of its food items to offset increased wage costs and other inflationary pressures. While this may have weighed down sales growth in the second half of 2024, it has helped maintain profit margins. The company has stated that any price increases will be kept to an "absolute minimum" to maintain customer value.
4. Efficient Cost Management: Greggs has been restructuring its manufacturing facilities and setting up 'centres of excellence' to improve operational efficiency. This, along with the opening of two new logistics sites in Derby and Kettering, has helped the company manage costs and maintain profit growth.
5. Strong Brand Recognition: Greggs' brand has continued to grow in popularity, with the company ranking as the most popular dining brand in Britain in 2024. This strong brand recognition helps drive customer loyalty and sales, contributing to profit growth.

Greggs' CEO, Roisin Currie, expressed confidence in the company's ability to manage inflationary pressures and deliver another year of progress. She stated, "We remain confident in our ability to manage inflationary headwinds and deliver another year of good progress."

To manage inflationary pressures in the coming year, Greggs can consider the following measures:

1. Price adjustments: Greggs can continue to monitor market conditions and adjust prices as needed, while ensuring that its offerings remain competitive and attractive to customers.
2. Efficiency gains: Greggs can focus on improving operational efficiency to reduce costs. This could involve streamlining processes, optimizing supply chain management, and reducing waste. By increasing efficiency, Greggs can minimize the impact of inflation on its profit margins.
3. Diversification: Expanding its product range and entering new markets can help Greggs spread the risk associated with inflation. By offering a wider variety of products and reaching new customers, Greggs can potentially offset any negative impacts on specific product lines or markets.
4. Investment in technology: Greggs can invest in technology to improve its production processes, reduce costs, and enhance the customer experience. This could include automating certain tasks, implementing more efficient inventory management systems, or leveraging data analytics to make informed decisions.
5. Employee engagement: Greggs can engage its employees in finding innovative solutions to manage inflationary pressures. By involving employees in the process, Greggs can foster a culture of continuous improvement and tap into the collective knowledge and creativity of its workforce.
6. Government support: Greggs can explore opportunities for government support, such as grants or tax incentives, to help offset the impact of inflation on its business. These programs can provide additional resources to help Greggs manage inflationary pressures.

In conclusion, Greggs' strong performance in 2024, driven by expansion and operational efficiency, has positioned the company to manage inflationary pressures and maintain growth in the coming year. By implementing the suggested measures, Greggs can better navigate the challenges posed by inflation and maintain its financial performance.