UK's Greggs raises profit outlook but plans factory closures

Greggs Upgrades Profit Forecast, Announces Factory Closures Amid Sales Growth

Greggs Reports Strong Sales and Strategic Changes

By James Davey

Profit Outlook Raised Following Strong Third-Quarter Sales

LONDON, Sept 30 (Reuters) - Greggs, Britain's largest fast-food chain, raised its annual profit outlook on Wednesday after stronger third-quarter sales and unveiled plans to close four manufacturing sites as part of an efficiency drive.

The group, best known for its sausage rolls, vegan products and sweet treats, said like-for-like sales at company-managed shops rose 3.4% in the 13 weeks to September 26, up from 2.1% growth in the first half of its financial year.

It said trading improved through the quarter, boosted by new product launches, including the Steak & Stilton Bake, and more settled weather in August and September.

Consumer Spending Trends

British consumers unexpectedly increased their shopping in August, official data published on September 18 showed.

Updated Financial Guidance

Greggs, which trades from 2,796 UK shops, more than McDonald's, said it now expected a "modestly improved" outcome for 2026, having previously forecast an underlying pretax profit similar to last year's £172 million ($228 million).

Its shares were last up 6.5%.

Factory Closures and Efficiency Drive

Closure of Manufacturing Sites

CLOSURE OF MANUFACTURING SITES

The group also said it plans to relocate parts of its manufacturing operations and close four sites. It has begun a consultation process that could result in about 740 job losses over two and a half years.

Rationale and Cost Implications

"We believe such changes, whilst difficult, are necessary to ensure Greggs continues to meet capacity requirements for growth in the years ahead in the most cost-efficient manner," it said.

The proposals would cost £60 million but save an annual £20 million in operating costs.

Market Perspectives and Future Plans

Some analysts believe Britain may have reached "peak Greggs" after the chain's rapid expansion in recent years, a view the company rejects.

Analysts are also concerned the growing use of weight-loss drugs, particularly new oral GLP-1 treatments, could reduce demand among some of Greggs' most frequent customers for its higher-calorie products.

Expansion Strategy

However, Greggs plans to open 100 to 110 net new shops in 2026 and has a long-term target of 3,500.

($1 = 0.7547 pounds)

(Reporting by James Davey. Editing by Kate Holton and Mark Potter)