£2116.7m market cap

2086p last close

With 2,078 shops, eight manufacturing and distribution centres and 23,000 employees, Greggs is the leading ‘food-on-the-go’ retailer. It uses vertical integration to offer differentiated products at competitive prices.

Investment summary

Greggs’ Q420 sales performance was better than we expected due to a faster recovery in sales despite ongoing COVID-19 restrictions; a strong contribution from delivery; and more net new store openings. The sales performance, improved profitability and a stronger financial position gives management the confidence to return to prior levels of space expansion. We upgraded our FY21 PBT forecast by c 2%. Greggs has many opportunities to accelerate growth in the medium term: more and larger stores; the shift from a single channel to multichannel; further product innovation; and more investment in its supply chain.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2018A 1029.3 145.7 89.8 70.3 29.7 13.8
2019A 1167.9 231.9 114.2 89.7 23.3 8.5
2020E 811.0 109.0 (15.0) (12.9) N/A 37.3
2021E 1042.6 188.1 62.0 48.9 42.7 10.6
Industry outlook

Greggs enjoys an expanding market. The Project Café2017UK report (Allegra World Coffee portal) valued the UK coffee shop market in 2016 at £8.9bn, +12% y-o-y, with branded outlets accounting for £3.7bn. Allegra estimates it could reach £16bn by 2025. The squeezed consumer is a potential concern, although Greggs is well placed for the value switch after widespread refurbishments and extended customer options as it moves to widen its market.

Last updated on 26/02/2021
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Share price graph
Balance sheet
Forecast net cash (£m) 36.6
Forecast gearing ratio (%) N/A
Price performance
Actual 1.1 19.4 (7.0)
Relative* 2.7 15.8 (1.4)
52-week high/low 2252.0p/1119.0p
*% relative to local index
Key management
Roger Whiteside CEO
Richard Hutton FD

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