Greggs - Eye-catching revenue growth

Greggs reported a strong acceleration in revenue growth in Q422 as revenue from new initiatives, digital and evening trading complemented anticipated space growth and underlying growth. Value leadership continues to support volume growth and the company’s ability to pass on inflationary cost pressures. As Greggs enters the second full year of its five-year strategy, FY23 profit growth is expected to improve as newer initiatives mature, and following the suppression of FY22 profit by internal investment, cost inflation and the return of some costs to the income statement post the initial COVID outbreak. We trim our FY23 and FY24 estimates by 3%, primarily due to higher-than-expected cost inflation.