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Greggs lifts profit guidance again as festive bakes and mince pies boost Christmas trading

Consumers have been tightening their purse strings of late, but it seems we can still find the money to treat ourselves to a sausage roll or steak bake
sausage roll
Greggs launched a vegan sausage roll to much fanfare last week

High street baker Greggs plc (LON:GRG) has lifted its full-year profit guidance for the second time in as many months following a “very strong” performance over Christmas.

Back in November, the sausage rolls and pasties seller said it expected to post a profit before tax of around £86mln for the year ended 31 December 2018, up from previous guidance of £82mln. It is now forecasting a pre-tax profit of “at least” £88mln.

Greggs has had to deal with a raft of consumer headwinds over the past year, with falling real-term wages and Brexit uncertainty forcing shoppers to rein in their spending.

READ: Peel Hunt upgrades Greggs

But it seems that steak bakes and cakes have so far been immune from the spending pullback though, with Greggs seeing total sales rise 7.2% in 2018.

Like-for-like sales, which strips out the impact of new stores, grew 2.9% over the year, while they jumped 5.2% in the fourth quarter.

The FTSE 250 company, which now has almost 2,000 shops in the UK, put the strong Christmas showing down to good demand for its Festive Bake and mince pies, as well as its hot drinks and breakfast options.

Good momentum heading into new year

“We delivered a very strong finish to 2018 despite the well-publicised challenges in the consumer sector,” said chief executive Roger Whiteside.

“This performance was broad-based, reflecting the strength of our range of freshly-prepared food and drinks, and the strategic changes that we have made in recent years to focus more effectively on the food-on-the-go market.”

Looking ahead, Greggs said it enters the new year with good sales momentum and operational execution.

It also begins 2019 with a new addition to its menu, the vegan sausage roll. It launched the roll last week to much fanfare and said it has proven “very popular” so far.

Shares rose 6.5% at the opening bell on Wednesday to 1,455p.

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