Last close As at 05/08/2026
GBP19.33
▲ −13.00 (−0.67%)
Market capitalisation
GBP1,977m
Research: Consumer
Greggs’ Q420 sales performance was better than we expected due to (in descending order) a faster recovery in sales despite ongoing and variable COVID-19 restrictions; a strong contribution from the new delivery initiative; and more net new store openings (28) for FY20 versus management’s prior guidance (20). The sales performance, improved profitability and a stronger financial position gives management the confidence to return to prior levels of space expansion. The new national lockdown limits our FY21 PBT forecast increase to c 2%.
Greggs |
New national lockdown tempers outlook |
Q420 trading update |
Retail |
7 January 2021 |
Share price performance
Business description
Next events
Analysts
Greggs is a research client of Edison Investment Research Limited |
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Greggs’ Q420 sales performance was better than we expected due to (in descending order) a faster recovery in sales despite ongoing and variable COVID-19 restrictions; a strong contribution from the new delivery initiative; and more net new store openings (28) for FY20 versus management’s prior guidance (20). The sales performance, improved profitability and a stronger financial position gives management the confidence to return to prior levels of space expansion. The new national lockdown limits our FY21 PBT forecast increase to c 2%.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
1,029.3 |
89.8 |
70.3 |
35.7 |
27.3 |
1.9 |
12/19 |
1,167.9 |
114.2 |
89.7 |
46.9*** |
21.4 |
2.4 |
12/20e |
811.0** |
(15.0)** |
(12.9) |
0.0 |
N/A |
N/A |
12/21e |
1,042.6 |
62.0 |
48.9 |
15.0 |
39.2 |
0.8 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Reported. ***Includes special dividend of 35p/share.
Q420: Sales and profit better than expected
Greggs’ like-for-like Q420 sales from company-managed stores at 81% of FY19 was a strong improvement from Q320’s 71%. There was a general improvement from 80% in October to 86% in December, but new COVID-19 lockdowns and restrictions led to a lower 77% in November. The new national delivery offering, available from 600 (c 29%) Greggs shops, is producing good and mostly incremental growth, representing 6% of company-managed sales. The encouraging performance means delivery will roll out to a further 200 shops in FY21. Lower year-on-year commodity price inflation and cost control produced underlying H220 PBT of c £20m, which was helped by government financial assistance of c £30m, to give total H220 PBT of c £50m, versus the £65m loss in H120. The improved profitability has enabled the repayment of the Bank of England CCFF facility, replaced by a three-year £100m RCF, while returning Greggs to a net cash position of £37m from net debt of £26m at H120.
FY21: PBT modest upgrade given uncertainty
The recently announced third national lockdown has an unknown end date and, with ongoing macroeconomic uncertainty, this leads to no management guidance for FY21. It expects pre-COVID-19 levels of profitability will not be achieved until at least FY22, but could be reached on a lower sales base given cost savings (property and recent headcount reduction of c 3%). Our FY21 PBT forecast increases from £60.8m to £62.0m as higher space growth (100 net new stores) is offset by lower expectations for sales early in the year (January/February) at 70% of FY20 due to the lockdown and a gradual build to 90% of FY19 levels by Q421.
Valuation: Share price re-rated but below peak
On our new forecasts, the EV/sales multiple for FY21 is 1.8x, a premium to the average multiple of 1.4x since the new strategy has been in place (FY15). This reflects the depressed level of sales but is at a discount to the previous peak multiple of 2.1x.
Exhibit 1: Financial summary
£m |
2018 |
2019 |
2020e |
2021e |
||
Year-end December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
1,029.3 |
1,167.9 |
811.0 |
1,042.6 |
Cost of Sales |
(373.5) |
(412.2) |
(310.4) |
(380.7) |
||
Gross Profit |
655.9 |
755.7 |
500.6 |
661.8 |
||
EBITDA |
|
|
145.7 |
231.9 |
109.0 |
188.1 |
Operating Profit (before amort. and except.) |
|
|
89.8 |
120.7 |
(8.9) |
68.1 |
Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(7.2) |
(5.9) |
(0.7) |
0.0 |
||
Operating Profit |
82.6 |
114.8 |
(9.6) |
68.1 |
||
Net Interest |
(0.0) |
(6.5) |
(6.1) |
(6.1) |
||
Profit Before Tax (norm) |
|
|
89.8 |
114.2 |
(15.0) |
62.0 |
Profit Before Tax (FRS 3) |
|
|
82.6 |
108.3 |
(15.7) |
62.0 |
Tax |
(18.2) |
(22.4) |
2.0 |
(12.7) |
||
Profit After Tax (norm) |
71.6 |
91.8 |
(13.0) |
49.3 |
||
Profit After Tax (FRS 3) |
65.7 |
87.0 |
(13.7) |
49.3 |
||
Average Number of Shares Outstanding (m) |
100.7 |
100.8 |
100.8 |
100.8 |
||
EPS - normalised fully diluted (p) |
|
|
70.3 |
89.7 |
(12.9) |
48.9 |
EPS - (IFRS) (p) |
|
|
65.3 |
86.3 |
(13.6) |
48.9 |
Dividend per share (p) |
35.7 |
46.9 |
0.0 |
15.0 |
||
Gross Margin (%) |
63.7 |
64.7 |
61.7 |
63.5 |
||
EBITDA Margin (%) |
14.2 |
19.9 |
13.4 |
18.0 |
||
Operating Margin (before GW and except.) (%) |
8.7 |
10.3 |
(1.1) |
6.5 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
347.5 |
646.5 |
636.7 |
641.5 |
Intangible Assets |
16.9 |
16.8 |
15.6 |
14.1 |
||
Tangible Assets |
330.5 |
353.7 |
348.9 |
355.2 |
||
Right-of-Use Assets |
0.0 |
272.7 |
268.9 |
268.9 |
||
Other |
0.2 |
3.3 |
3.3 |
3.3 |
||
Current Assets |
|
|
140.6 |
142.3 |
72.7 |
152.1 |
Stocks |
20.8 |
23.9 |
17.2 |
21.2 |
||
Debtors |
31.6 |
27.1 |
18.8 |
34.3 |
||
Cash |
88.2 |
91.3 |
36.6 |
96.6 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(145.1) |
(208.7) |
(133.6) |
(160.3) |
Creditors |
(136.4) |
(154.1) |
(79.0) |
(105.7) |
||
Leases |
0.0 |
(48.8) |
(48.8) |
(48.8) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(8.7) |
(5.8) |
(5.8) |
(5.8) |
||
Long Term Liabilities |
|
|
(13.8) |
(233.3) |
(235.0) |
(235.0) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
0.0 |
(226.9) |
(226.9) |
(226.9) |
||
Other long term liabilities |
(13.8) |
(6.4) |
(8.1) |
(8.1) |
||
Net Assets |
|
|
329.2 |
346.8 |
340.8 |
398.3 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
152.2 |
246.0 |
56.3 |
198.3 |
Net Interest |
0.2 |
(6.3) |
(6.1) |
(6.1) |
||
Tax |
(16.1) |
(20.3) |
2.0 |
(12.7) |
||
Capex |
(64.9) |
(87.7) |
(60.0) |
(73.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
5.3 |
4.9 |
5.4 |
5.4 |
||
Dividends |
(33.1) |
(72.1) |
0.0 |
0.0 |
||
Borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(9.9) |
(61.4) |
(52.3) |
(51.8) |
||
Net Cash Flow |
33.7 |
3.1 |
(54.7) |
60.1 |
||
Opening cash |
|
|
54.5 |
88.2 |
91.3 |
36.6 |
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing cash |
|
|
88.2 |
91.3 |
36.6 |
96.6 |
Closing net debt/(cash) |
|
|
(88.2) |
(91.3) |
(36.6) |
(96.6) |
Closing net debt/(cash) including leases |
|
|
(88.2) |
184.4 |
239.1 |
179.1 |
Source: Company accounts, Edison Investment Research
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Research: Real Estate
H220 condominium sales increased strongly at a healthy c 20% average premium to book value and disposal proceeds have supported continuing share repurchases at a c 30% discount to net asset value (NAV), enhancing value creation. As discussed in detail in our December initiation note, pending a resolution of the rent cap legal challenge, so far Phoenix Spree Deutschland (PSD) has sought to mitigate the effects while maintaining strategic flexibility; a resolution, which PSD expects mid-year, will determine the strategy for extracting the value embedded in its portfolio.