Greggs raises full-year guidance after bumper Christmas

Britain's largest baker Greggs has raised its full-year profit guidance after strong Christmas trading, which saw sales increase 6.4%, but warned investors that it faced industry-wide headwinds in 2017 that would impact income growth.

Total sales grew 7% in FY16, with company-run stores enjoying like-for-like sales growth of a more modest 4.2%. Christmas sales were particularly strong for the FTSE 250 firm:

"...aided by a favourable trading pattern... fourth quarter company-managed shop like-for-like sales grew by 6.4 per cent. Excluding the final two weeks of the year fourth quarter like-for-like sales growth was 4.1 per cent."

Greggs opened 145 new stores and closed 79, with total stores reaching 1,764. The firm earned £2.2m in disposal gains during the period:

"As planned, our estate management programme included the closure of a number of freehold shops and an office building. This resulted in disposal gains in the year of £2.2 million, some £1.5 - 2.0 million higher than might be expected in an average year."

Chief Exec Roger Whiteside welcomed the results but warned that 2017 will bring a number of industry headwinds:

"We finished 2016 well, delivering our thirteenth consecutive quarter of like-for-like sales growth, and anticipate that we will report full year results for 2016 slightly ahead of our previous expectations.

In the year ahead, whilst we will undoubtedly see a number of well-documented industry headwinds, we are confident we will continue to make progress with the implementation of our strategic plan, including significant investment in our capability to supply a growing shop estate."

Greggs shares opened up 3% in early trading on Tuesday.