Last close As at 05/08/2026
GBP19.33
▲ −13.00 (−0.67%)
Market capitalisation
GBP1,977m
Research: Consumer
Greggs continues to generate premium sales growth through a combination of volume, including market share gains as distribution increases, and price growth. The strength of underlying trading in Q323 is highlighted by management’s confirmation of consensus FY23 PBT expectations despite the addition of new costs for expanding the company’s delivery offer to a second platform and a slight delay in some store openings from the end of the year into FY24.
Greggs |
FY23 profit expectations reiterated |
Q323 trading update |
Retail |
3 October 2023 |
Share price performance
Business description
Next events
Analysts
Greggs is a research client of Edison Investment Research Limited |
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Greggs continues to generate premium sales growth through a combination of volume, including market share gains as distribution increases, and price growth. The strength of underlying trading in Q323 is highlighted by management’s confirmation of consensus FY23 PBT expectations despite the addition of new costs for expanding the company’s delivery offer to a second platform and a slight delay in some store openings from the end of the year into FY24.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/21 |
1,229.7 |
145.6 |
114.3 |
97.0 |
21.1 |
4.0 |
12/22 |
1,512.8 |
148.3 |
117.5 |
59.0 |
20.5 |
2.4 |
12/23e |
1,778.4 |
164.9 |
116.3 |
66.1 |
20.7 |
2.7 |
12/24e |
1,970.1 |
186.0 |
133.8 |
66.9 |
18.0 |
2.8 |
12/25e |
2,196.6 |
207.7 |
149.4 |
74.7 |
16.1 |
3.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Continued premium sales growth
Total y-o-y revenue growth of 20.8% in the 13 weeks to 30 September follows H123 growth of 21.5%. On an underlying basis, like-for-like (l-f-l) growth in company-managed stores of 14.2% (16% in H123) is moderating, as should be expected given Greggs has been and will continue to annualise against price increases made in FY22 (May, October and December) to counter elevated cost inflation and the normalisation of comparatives post COVID. Q323 y-o-y growth was helped by c 1% due to the one-day store closures in Q322 for Queen Elizabeth II’s funeral. Looking forward, Q423 has a much tougher comparative, 18.2% l-f-l in company-managed stores in Q422 due to the combined effects of the price rises made through FY22 and growth from new initiatives, than Q322’s comparative of 9.7%. Management believes its share of market transactions continues to increase. The outlook for cost inflation is unchanged from the interim results.
FY23 profit estimates unchanged
Management expects full-year profit outcome to be in line with previous expectations, noting that consensus estimates have drifted up over the summer to FY23 PBT of £164.7m, in line with our estimates. This is encouraging given higher costs for the announced roll-out of Greggs’ delivery service (500 live stores by end October 2023) on the Uber Eats platform to complement its presence on Just Eat, and the minor lost profit contribution from fewer net new store openings (between 135 and 145 net new stores from the previously expected 150).
Valuation: FY23 P/E multiple back to recent averages
Greggs’ share price is broadly flat since the start of 2023, having reached a peak of more than £29 in May 2023, suggesting a modest de-rating following our upgrades to estimates in March and August. The prospective FY23 P/E multiple of 20.7x is above the post-FY13 average of 17.1x, but more in line with average multiples of c 20x and above in more recent years.
Exhibit 1: Financial summary
£m |
2020 |
2021 |
2022 |
2023e |
2024e |
2025e |
||
Year-end December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
811.3 |
1,229.7 |
1,512.8 |
1,778.4 |
1,970.1 |
2,196.6 |
Cost of Sales |
(299.6) |
(447.7) |
(574.5) |
(696.7) |
(773.4) |
(868.5) |
||
Gross Profit |
511.7 |
782.0 |
938.3 |
1,081.7 |
1,196.7 |
1,328.1 |
||
EBITDA |
|
|
115.4 |
259.0 |
269.9 |
303.7 |
350.6 |
395.1 |
Operating profit (before amort. and excepts.) |
|
|
(6.2) |
153.2 |
154.4 |
167.6 |
190.0 |
212.2 |
Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(0.8) |
0.0 |
0.0 |
16.3 |
0.0 |
0.0 |
||
Operating Profit |
(7.0) |
153.2 |
154.4 |
183.9 |
190.0 |
212.2 |
||
Net Interest |
(6.7) |
(7.6) |
(6.1) |
(2.7) |
(4.0) |
(4.5) |
||
Profit Before Tax (norm) |
|
|
(12.9) |
145.6 |
148.3 |
164.9 |
186.0 |
207.7 |
Profit Before Tax (FRS 3) |
|
|
(13.7) |
145.6 |
148.3 |
181.2 |
186.0 |
207.7 |
Tax |
0.7 |
(28.1) |
(28.0) |
(45.3) |
(48.4) |
(54.0) |
||
Profit After Tax (norm) |
(12.2) |
117.5 |
120.3 |
119.6 |
137.6 |
153.7 |
||
Profit After Tax (FRS 3) |
(13.0) |
117.5 |
120.3 |
135.9 |
137.6 |
153.7 |
||
Average Number of Shares Outstanding (m) |
101.0 |
101.5 |
101.5 |
102.0 |
102.0 |
102.0 |
||
EPS - normalised fully diluted (p) |
|
|
(12.1) |
114.3 |
117.5 |
116.3 |
133.8 |
149.4 |
EPS - (IFRS) (p) |
|
|
(12.9) |
115.7 |
118.5 |
133.2 |
134.9 |
150.7 |
Dividend per share (p) |
0.0 |
97.0 |
59.0 |
66.1 |
66.9 |
74.7 |
||
Gross Margin (%) |
63.1 |
63.6 |
62.0 |
60.8 |
60.7 |
60.5 |
||
EBITDA Margin (%) |
14.2 |
21.1 |
17.8 |
17.1 |
17.8 |
18.0 |
||
Operating Margin (before GW and except.) (%) |
(0.8) |
12.5 |
10.2 |
9.4 |
9.6 |
9.7 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
631.0 |
622.3 |
685.1 |
819.5 |
952.2 |
1,045.5 |
Intangible Assets |
15.6 |
14.9 |
13.5 |
22.0 |
28.5 |
33.4 |
||
Tangible Assets |
345.3 |
343.8 |
390.0 |
501.0 |
612.3 |
685.7 |
||
Right-of-Use Assets |
270.1 |
263.6 |
281.6 |
296.5 |
311.4 |
326.4 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Assets |
|
|
98.7 |
266.1 |
283.0 |
281.8 |
266.6 |
305.3 |
Stocks |
22.5 |
27.9 |
40.6 |
49.2 |
54.7 |
61.4 |
||
Debtors |
39.4 |
37.6 |
50.2 |
59.0 |
65.4 |
72.9 |
||
Cash |
36.8 |
198.6 |
191.6 |
172.9 |
146.0 |
170.4 |
||
Other |
0.0 |
2.0 |
0.6 |
0.6 |
0.6 |
0.6 |
||
Current Liabilities |
|
|
(144.1) |
(206.9) |
(244.1) |
(287.5) |
(315.6) |
(350.0) |
Creditors |
(91.1) |
(153.4) |
(191.7) |
(232.5) |
(258.1) |
(289.8) |
||
Leases |
(48.6) |
(49.3) |
(48.8) |
(51.4) |
(54.0) |
(56.6) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(4.4) |
(4.2) |
(3.6) |
(3.6) |
(3.6) |
(3.6) |
||
Long Term Liabilities |
|
|
(264.0) |
(252.3) |
(284.3) |
(296.6) |
(309.0) |
(321.3) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
(243.1) |
(233.9) |
(252.5) |
(264.8) |
(277.2) |
(289.5) |
||
Other long term liabilities |
(20.9) |
(18.4) |
(31.8) |
(31.8) |
(31.8) |
(31.8) |
||
Net Assets |
|
|
321.6 |
429.2 |
439.7 |
517.2 |
594.3 |
679.5 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
61.6 |
312.1 |
272.3 |
347.3 |
368.4 |
416.6 |
Net Interest |
(6.7) |
(7.4) |
(4.8) |
(2.1) |
(3.4) |
(3.9) |
||
Tax |
(10.7) |
(19.2) |
(13.3) |
(45.3) |
(48.4) |
(54.0) |
||
Capex |
(59.8) |
(54.0) |
(102.4) |
(200.0) |
(220.0) |
(200.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
3.7 |
4.6 |
3.1 |
3.1 |
3.1 |
3.1 |
||
Dividends |
0.0 |
(15.3) |
(98.5) |
(67.4) |
(68.2) |
(76.2) |
||
Borrowings and lease liabilities |
(42.1) |
(49.0) |
(52.7) |
(55.6) |
(58.4) |
(61.2) |
||
Other |
(0.5) |
(10.0) |
(9.4) |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(54.5) |
161.8 |
(5.7) |
(20.0) |
(26.9) |
24.4 |
||
Opening cash |
|
|
91.3 |
36.8 |
198.6 |
192.9 |
172.9 |
146.0 |
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing cash |
|
|
36.8 |
198.6 |
192.9 |
172.9 |
146.0 |
170.4 |
Closing net debt/(cash) |
|
|
(36.8) |
(198.6) |
(191.6) |
(172.9) |
(146.0) |
(170.4) |
Closing net debt/(cash) including leases |
|
|
254.9 |
84.6 |
109.7 |
143.3 |
185.1 |
175.7 |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
IP Group has built a commendable portfolio of businesses developing breakthrough technologies, with an aggregate value of more than £200m at end-June 2023 (c 16% of IP Group’s total portfolio value), mostly across four key focus areas: applied AI, next-generation networks, human-machine interface and future compute. Importantly, around 90% of the deeptech portfolio (by fair value) has already started to generate revenue. Both of its two most valuable holdings, Featurespace (adaptive behavioural analytics for fraud and financial crime detection) and Garrison Technology (which provides a remote web browser and related hardware) have revenues in the tens of millions sterling and growing quickly.