Greggs briefly returned to it's Super Stock status on Stockopedia on Wednesday. That is a sort of 'all the stars are aligned' sort of cue to future performance.
The Company passed the more than 1/3 of stores being off the High Steet milestone.
Greggs had 54.5m pounds sterling in cash and equivalents at the year end.
Contracts have been exchanged [following the end of the year] for the sale of the former Twickenham bakery for residential development.
The Board visited Northern Ireland during 2017 to see the progress being made and the opportunities that abound.
The Balanced Choice range now has sales in excess of 100m pounds sterling per year.
There were 202 franchises as of the end of 2017, and there are plans for the addition of between 20 and 40 further franchise units in 2018. In addition Devon now has it's first Greggs unit.
Net 90 new units opened and 132 shops refurbished. The rewards/loyalty scheme goes from strength to strength, and 6m free primary school breakfasts were provided by Greggs, in association with it's 80 partners, in 465 schools in 2017.
According to the FT last Saturday Greggs had a 4.5 per cent share of the Fast Food marke as of 2016.
To me that just shows how much more there is out there for Greggs to take aim at, and Greggs are going to be opening between 110 and 130 new outlets this year, so they are firmly 'on the case'.
There is a lot to play for and the results out today show that Greggs is right up for the challenge. With 2018 being the year of peak capital investment, shareholders can expect ever growing returns via ordinary and special dividends from 2019 onwards.
The emphasis in the results on the new product range and especially the HOT Food and HOT drinks, points stongly towards the 'street food' concept that Greggs are trying out via a potential move into the evening section of the eating day.
It is all to play for and if your with Greggs you will be on a winning team.
We had Costa showing signs of hurting in that their LFL's were recently anything but impressive.
Now we have reports from Sky that the sandwich chain Eat has called in KPMG to advise them with regard to closing a significant number of their approximately 100 units.
I will not go as far as to call these two chains 'Zombies' - but there will be plenty of other much smaller chains that are really feeling it about now, having only survived because of ultra low interest rates, which are now only moving in the upward direction in the forseeable future. Only the fittest will survive the return to 'normal' levels of interest rates and the rising costs that are 'all around them'.
Now that the share price has stepped back from it's 14 pounds sterling high water mark a good entry point has arrived.
House broker UBS has recently confirmed Greggs as a BUY with a target price of 14.50 up from 13.50 previously. It's pronouncements are usually regarded as being on the cautious side of events.
There are now 200 franchised units, the earliest of which has now been refurbished/upgraded to the latest 'Food on the Go' format. That's a major milestone in more than one way.
The Company has installed hot food cabinets in 100 stores in order to trial entry into the evening trade where Greggs has not been willing to tread in years gone by. The menu for the evening includes chicken goujons, potato wedges and pasta dishes. The extension of trading hours in selected stores, perhaps until 9pm to match the hours of the single [to date] 'Drive Thru', must therefore be highly likely, making more efficient use of parts of the rented estate.
The balanced choice range of calorie controlled products has continued to sell well and it has been confirmed that it is likely that the Company will start selling Vegan sandwiches later this year.
With all sorts of admin related and supply chain related initiatives 'coming up trumps' and long term relationships with partners such as Eurogarages progressing well, Greggs have upped the level of store openings this year from around 100 to the 110-130 level.
There is plenty going on at Greggs and others like Costa appear to be feeling the heat.
Barclays Capital have entered the arena with an equal weighting and target price of 14.05 pounds sterling while initiating coverage.
Investec Securities have increased their target price from 13.50 to 14.50 pounds sterling and advising a buy for Greggs, which in their recent review of the retail sector they describe as a 'steady eddy compounder'.
The share price has now hovered around the 13.50 mark for longer than the previous two peaks in the last two years at around 13. It would appear to be getting itself established at this level before making the next leap early in the new year shortly after the next trading update in mid January.
That will also be about the time when we should hopefully here more about a number of new drive thro' locations, and this could turbo charge the shares.
"With plenty of stocks currently trading at all-time or multi-year highs, investors are right to be sceptical about valuations in some sectors. But any pull back from lofty levels can present buying opportunities, and that's clearly what's ..."
Greggs have apparently been encouraged by the popularity of the first Drive Thru in Irlam, Manchester. It looks likely that we will see further trial locations opened in this format fairly soon.
The roll out of the central forecasting and replenishment system has been sucessfully completed ahead of plan, and has been the 'most significant process change ever embarked upon' by the Company. The biggest impacts are likely to come in increased product availability in stores and reduced wastage.
The interim dividend is to be increased by 10 per cent. The dividends are now largely formulaic as the interim is one third of the previous year's total and the final is based on two times cover.
The long run rate of like for like sales increases appears to be largely settled in the 3 to 4 per cent range on a year to year basis over a number of years.
On checking the Stockopedia website today I noticed that Greggs is now classified as a 'Super Stock' have most recently been classified as 'Neutral'.
This as far as I can recollect may be the first time it has been in this Super Stock classification [the 'best' classification ] since around the end of 2014, when you might remember that the Greggs share price subsequently doubled in very short order.
I think this bodes well for the share price and believe that things might well start to happen for the share price in a positive fashion as early as next month following the trading update and Interim Earnings release due this coming Tuesday 1 August.
Adjusted Earnings before Interest and Tax [EBIT] were running at around 40-50 million pounds sterling between 2007 and 2013.
Since 2013 they have 'taken flight' and have risen sharply to reach 80 million in 2016 with this rise set to continue well into the future.
This is, and will contiue to be, achieved by the addition of approximately 100 new outlets per year with a figure of 2,500 units now being openly discussed by management, giving a seven year expansion target from the 1,800 units at present.
The current very high levels of investment in the business will allow it to expand it's digital presence so that 'click and collect' will become available alongside plans for mobile ordering and the ability to customise orders.
This is a genuinely innovative business which is determined to be right up with events.
Greggs continues to innovate through it's on-going five year programme for change in all areas of the business.
The summer menu is full of new ideas and there is a first 'drive thru' in Manchester [ acouple of years ago I posted a message on April Fools Day that this had happened but now it is no joke].
The performance in the early part of this year has been better than the market expected, and as we approach the mid point of the year the market will begin to turn it's attention to 2018 when earnings per share are predicted to increase dramatically compared to what was previuosly 'pencilled in' for 2017.
While admitting that a special dividend must now be a non-starter for 2017 I still hold to my belief that a special dividend in 2018 is a better than 50 per cent bet, with the cash availability being at least in part dependent on the sale of the former bakery site at Twickenham for housing, which again I have to admit cannot be taken for granted that it will occur in 2018.
The trading update this morning was very much in line with my expectations, and keeps the Company on course with it's plans. The AGM tomorrow should be a relatively happy affair.
Essentially franchised units now make up 10 per cent of the total, while sales for the year to date are ahead of consensus estimates. Northern Ireland and the West Country specifically mentioned as targets for new units.
Well actually I have owned Greggs shares for more than 30 years but the information I am sharing relates to a holding period of 27 years from September 1988 to September 2015. The information and calculations are not my own.
Sales Compound annual growth rate of 9.57 per cent over 27 years
Earnings Compound annual growth rate of 10.42 per cent over 27 years
Dividends Compound annual growth rate of 15.46 per cent over 27 years
Since you ask your purchase in 1988 of 1,000 pounds sterling worth of Greggs shares in 1988 would be worth nearly 26,000 pounds sterling today.
Again since you ask in the single year of 2015 you would have received in dividend income more than your original investment.
And again since you ask you would have received in total more than 6,000 pounds sterling in dividends over the 27 years.
Now that is some Company - and I am sure that shareholders will be pleasantly surprised by the content of the trading update due at 7 am on Thursday 18 May.
The strong buy is for the long term , and you can see that I really mean that, as ever.
The executive Directors have just acquired over 15,000 shares between three of them.
That is a vote of faith in my book with the chief executive purchasing more than 10,000 shares personally.
Like the Directors of the Company I have great faith in Greggs. My faith is at least in part due to my belief that Greggswill be the provider of further future Special Dividends, and just maybe that may also be the case for the Directors, who have better knowledge of this situation/likelihood than I do for obvious reasons.
Decent Profits, Good Expansion, healthy products, yet every time I look GRG is red.
Down again today on a good day in the markets in general. Anyone any thoughts of this company and perhaps reasons it is behaving in a dire fashion?
Less than 10 days since a very encouraging trading update and we are back where we were in terms of the share price.
In December 2015 franchised units represented 6 per cent of total units, in September 2016 it was 8 per cent and the latest figure is 9 per cent or 157 franchises and 1,764 units in total. 99 franchised outlets are within properties owned by Euro Garages and a further substantial number are within Moto service stations.
It would appear that the franchised part of the business is growing 'apace', and faster than most comentators forecast. On that basis I see the figure of 10 per cent being surpassed quicker than most forecast, and 15 percent looking like the next target rather than an assumed 10 per cent.
The important thing to note about the Frachise Model is that it delivers immediate profits as against Company owned units which typically take around one year to get established and start generating profits. those immediate profits go straight to the 'bottom line'.
I think, all other things being equal [which I grant you they seldom are], a modest 'Special' dividend is a possibility in the middle to back end of 2017, perhaps half the size of the most recent such payment of 20p per share, ie 10p costing the Company 10 million pounds. Whether it starts in 2017 or 218 it will be the start of an annual 'special' dividend as the Company's investment cycle continues to produce the goods.
"Cooking up its thirteenth consecutive quarter of sales growth, full-year results from LSE:GRG:Greggs are set to beat expectations once again. The high street baker has been hard at work transforming its stores and ranges, and the overhaul ..."
" Life on the high street remains tough and shop-face businesses are under pressure. LSE:GRG:Greggs is no different, but with the transformation of its stores and new, healthier products well underway, the company and its shareholders are reaping ..."
Less than two weeks to the interim results and trading update on 2 August.
We will find out if it was right to lump Greggs in with all the other Brexit sufferers, or whether the Company really is a special case as I believe it is.
Greggs is a one-off and the results and trading update will prove it - you heard it here first, or perhaps not since most of the analysts currently have unchanged buy advice and 12 month forecasts from prior to the Referendum.
Yes to that.....Brexit is like a computer crash and we are still in the OMG what has happened phase. Still, after we reboot with the EU, with due time and effort, I hope that our 'computer' will work as well as before.
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