STORY: Greggs’ “surprising strong finish” to 2018

By Fiona Cincotta, senior market analyst at cityindex.co.uk.

May's profit warning seems like a distant memory now that Greggs has made a surprisingly strong finish to 2018.

More sales volatility can't be ruled out in future, though the company appears to be on a stronger footing now than it was heading into last year.
Greggs' breakfast offering has proven popular with groggy workers on the go.

Previous investments in manufacturing capabilities and administration systems, meanwhile, are set to bear fruit over the coming months via efficiency gains.

Then, of course, are those vegan sausage rolls (pictured).

All the media controversy swirling since their launch last Thursday appears to have given Greggs a welcome helping of free publicity, for a product that could be a key driver of sales growth in the current year.

We think it highly unlikely that all those vegan-loathing carnivores out there, although outraged by the launch, will be outraged enough to forgo their Greggs steak bakes in protest.

Recent Industry data was already pointing to a sales slump for Sainsbury's but the extent of this fall is worse than feared.

Sainsbury's is clearly smarting from a fresh competitive assault by the German discount retailers.

Aldi and Lidl's cheaper offerings have proven harder for shoppers to resist during a testing Christmas trading period blighted by heightened Brexit uncertainty.

Sainsbury's has reiterated its annual cost-savings target but its previous profit guidance is notably absent from today's announcement.

That doesn't mean the guidance has been dropped, though these poor sales figures will heighten fears it's vulnerable to a downgrade.

Interestingly, Sainsbury's takeover target Asda was the best-performing big retailer over Christmas, intensifying the sense of urgency for a deal to be sealed. Clearance by the competition regulator, however, remains far from assured.