British baker Greggs posted its first sales growth for 2 years in the last quarter of 2013 as demand for mince pies at Christmas gave an extra lift to its renewed focus on takeaway food.
Greggs said early in 2013 that it planned to return to growth via its core "food-on-the-go" business - selling sandwiches and hot pasties - and abandoned a previous strategy to build cafes and supply third parties.
By its fiscal fourth quarter sales at stores open for more than a year grew 2.6 percent, with sales in the five week festive period up 3.1 percent, the company said on Thursday. The last time Greggs posted quarterly growth in like-for-like sales was in the third quarter of 2011.
Shares in Greggs jumped 8.6 percent in morning trade to their highest level for 9 months. Analysts at Panmure Gordon and UBS said the company had beaten their forecasts on a quarterly and a full year basis respectively.
"Today's update is further vindication of the strategy being implemented by the new CEO to revive growth and fundamentally improve the retail proposition," Singer Equity analyst Sahill Shan said.
Greggs' new chief executive Roger Whiteside, who has issued two profit warnings while undertaking the strategy shift, said there was more to be done to cement Greggs's turnaround and announced 410 jobs would be cut from both the company's in-store bakeries and its management and support teams, to help reduce costs.
The redundancies will result in costs and asset impairment charges of 9 million pounds ($14.82 million) this year and bring annual savings of 6 million pounds from mid-2015.
"It's going to take us two or three years to get the business into the sort of shape to give us a platform for long-term sustainable growth," Whiteside told Reuters.
He warned that there was no indication yet that customers' disposeable incomes were rising nor that tough competition in the food-on-the-go market was easing.
In addition to supermarket-owned convenience stores in town centres selling sandwiches and snacks encroaching on Greggs' patch, the rapid growth of coffee shops on Britain's high streets are also making the market tough for the company.
Over its fiscal year 2013, Greggs' like-for-like sales fell 0.8 percent, which it said reflected difficult trading conditions earlier in the period.
Greggs said full-year results, scheduled for Feb. 26, would be in line with expectations - analysts have forecast pre-tax profit of 40.7 million pounds - and said again that due to the cost of its turnaround plan, profit growth was likely to be constrained over the next two years.
