Rising Greggs adds marketing to mix

Oct 10 2007 by Graeme King, The Journal

IT WAS a bullish start to the day for the FTSE 100 index. It was 63 points higher by the end of the morning’s trading despite a degree of caution before the pre-Budget report.

In the regional portfolio Greggs featured among the top 20 biggest movers on the FTSE 350 after a positive trading statement.

Shares were boosted by 3.4% early in the day on the news that like-for-like sales since the announcement of interim results on July 31 had grown 5.9%. The weather in August and September were said to have assisted sales.

The sales growth is all the more impressive in light of the significant increase in costs of a number of ingredients, including flour and dairy products, although to an extent these cost pressures were mitigated by forward buying.

Group MD Sir Mike Darrington said the fresh wave of TV advertising last month might also have contributed to the positive sales performance. In the year to date, Greggs has opened 17 new shops and expects 30 more over the course of the year.

UBS said its second half like-for-like growth estimate of 4.6% looked comfortably achievable. The shares ended the day 260p higher at £49.10.

Elsewhere in the regional list, Dermasalve Sciences reported that its Healthy and Essential unit has exceeded its revenue target in the first year of acquisition, achieving an unaudited turnover of £1.4m. Dermasalve made the all-share acquisition of Healthy and Essential in August 2006. The shares ended the day flat at 6.1p.

Finally, the strongest performance of the day came from Northern Rock, whose shares closed 20% higher at 206p.

Fiona Erdozain is an investment adviser of the Wise Speke division of Brewin Dolphin Ltd.