Baker Greggs posted better-than-expected sales over the Christmas and New year period as cash-strapped Britons sought indulgence on the cheap, snapping up record numbers of sweet mince pies, festive bakes and giant gingerbread men.
The Newcastle-based firm, which also sells bread, sandwiches, savouries, cakes and pastries to over 6 million customers a week, said on Wednesday sales at stores open over a year jumped 5.1 percent in the five weeks to January 7.
That compares with a third quarter rise of 0.8 percent.
Total sales rose 10.8 percent in the five week period, partly reflecting 84 net new store openings during the year.
Our great strength for value hit a chord again for consumers, Chief Executive Ken McMeikan told reporters, noting mild weather and a favourable trading pattern, with Christmas Eve on a Saturday, also helped.
In the Christmas period the firm sold 7.5 million mince pies, nearly 1 million festive bakes and 75,000 giant gingerbread men.
For the 52 weeks to December 31 total sales rose 5.8 percent, with like-for-like sales up 1.4 percent, ahead of analyst expectations of about 0.5 percent.
With British shoppers' disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, store chains generally had a tough Christmas, using early discounting to attract customers. They do not expect 2012 to be much better.
LESS DISPOSABLE INCOME
Greggs, with its relatively low average transaction value of just over 2 pounds, has fared better than most.
It forecast 2011 results in line with expectations and marginally positive like-for-like sales growth in 2012 along with a net 90 more new shop openings.
Shore Capital analyst Darren Shirley is forecasting a 2011 pretax profit of 52.3 million pounds. We continue to see Greggs as a medium/long-term growth company, with sustained lfl growth through 2011 a considerable achievement, he said.
With about 1,550 stores currently, Greggs has more outlets in the UK than McDonald's and is targeting over 2,000.
McMeikan, a former Tesco and Sainsbury's executive and Royal Navy veteran of the Falklands War, sees 2012 as a similar year for the consumer to 2011.
I think they are going to continue to seek out tremendous value, they are going to have less disposable income and therefore they are going to continue to look for discounts and promotions, he said.
With this in mind he said Greggs would continue to push its Meal Deal, which offers a sandwich, a drink and a packet of crisps for 2.99 pounds, and re-introduce popular lines.
We've actually had Facebook calls to bring back 'The Spicy One, which he described as fajita-flavoured chicken breast pieces in a creamy sauce with spicy pepperoni, wrapped in glazed puff pastry with lattice decoration and a cheese topping.
The CEO added that while 2012 will continue to see commodity price inflation, in areas such as sugar, pork and poultry, overall it would not be at levels experienced in 2011.
Shares in Greggs, which prior to Wednesday's update had increased by 15 percent over the last year, were down 0.1 percent at 518 pence at 1:05 p.m., valuing the business at about 524 million pounds, and outperforming the FTSE Mid 250 index, down 0.4 percent.
Separately on Wednesday grocer Sainsbury beat Christmas sales forecasts, while youth fashion retailer SuperGroup and home shopping firm N Brown posted sales increases.
(Reporting by James Davey; Editing by Adveith Nair and Helen Massy-Beresford)