Business

Greggs stockpiles pork for sausage rolls ahead of Brexit

Greggs sausage roll Image copyright Greggs

High Street bakery chain Greggs is stockpiling pork so that production of its sausage rolls is guaranteed in the event of a no-deal Brexit.

"We are preparing for the potential impact of the UK's departure from the European Union by building stocks of key ingredients," the firm said.

Around 20% of a Greggs sausage roll is made from pork.

It has previously said a no-deal Brexit may mean it has to find alternatives for fresh tomatoes and lettuce.

The bakery chain detailed its planning for the UK's departure from the EU in a trading update which showed that total sales had risen 12.4% in the past 13 weeks.

The Newcastle-based firm hailed "very strong" trading in the third quarter, but also warned that Brexit could put pressure on food and labour costs.

As well as stockpiling key ingredients the firm has also been acquiring some light equipment, "that could be affected by disruption to the flow of goods into the UK".

'Turning point'

However, shares fell by 12.5% after the company also said it expected fewer shop openings by the end of the year than it had previously forecast.

Greggs now expects to have 90 net openings - taking closures into account - by the end of the year, down from a previous forecast of 100 net openings.

Like-for-like sales, which exclude new store openings, rose up 7.4% in the quarter to 28 September, but that was a slower pace than earlier in the year.

"The stock was pretty highly valued and there is an underlying sense that the growth cannot continue at the rate it has - today's update suggests this is the turning point on that front," said Neil Wilson, chief analyst at Markets.com.

"The idea being they've taken as much market share as they can, and now have to try to squeeze more from what they've got already."

He added: "Like-for-like sales growth is slowing now at 7.4% against 10.5% a year before. Management also think the fourth quarter will show further slowing. So the tough comparisons with the last 12 months or so suggests they are maxed out or close to maxing out the organic growth."

Other main points in its trading update included:

  • Like-for-like sales for the year to date have risen by 9.4%, helped by a new autumn menu and offers
  • Total sales are up by 13.9% this year so far
  • 90 new stores have opened during 2019 so far, while 34 sites have closed

Greggs added it was continuing to trial evening openings, with deals for pizza and hot food available in some stores after 4pm.

More on this story