Vegan sausage rolls rake in the dough for Greggs, shares hit record

(Reuters) - Rising demand for Greggs Plc’s vegan sausage rolls prompted the British baker to raise its annual forecast for the second time this year, sending its stock price to an all-time high.

FILE PHOTO: A sausage roll is seen on top of a bag at a Greggs bakery in Manchester, Britain March 1, 2016. REUTERS/Phil Noble

Shares of the company, which floated in 1984, surged as much as 16% to 2,070 pence to the top of the mid-cap index on Tuesday.

The company launched the savoury vegan sausage roll in January, seeking to tap into the “Veganuary” movement that encouraged Britons to cut down on - or cut out entirely - meat products for health and environmental reasons.

Since then the rolls have been a big hit and the company now serves them in all its stores, bulking up its sales and bottom line.

Greggs said limited availability in the early part of the year was a hurdle when demand outstripped supply.

Sales of breakfast and traditional sweet bakery items are also growing, Greggs said.

“U.K. consumers’ penchant for coffee, bakery, sausage rolls, vegan or otherwise, as well as sandwiches appears to be padding out the waistline for Greggs,” said Michael Hewson, analyst with CMC Markets.

The company, which has 1,950 outlets on shopping streets, railway stations and motorway stops, said it now expects sales and underlying profit before exceptional costs to be ahead of its previous expectations, but did not give any figures.

The mean forecast from analysts is revenue of 1.11 billion pounds and pretax profit of 99.38 million pounds this year, according to Refinitiv IBES.

The latest trading update provided more good news for investors after Greggs said here in March it expected to pay a special dividend in July after a "very strong" start to 2019, following a 10 percent jump in profit in 2018.

Total sales for the 19 weeks to May 11 rose 15.1%, while like-for-like sales in company-managed shops grew 11.1%.

An expected increase in costs this year will stay broadly in line with plans, Greggs said.

Shares of the company, which have gained almost 57% since the start of 2019, were last up 11% at 1,986 pence by 0746 GMT.

Reporting by Shashwat Awasthi and Muvija M in Bengaluru; Editing by Bernard Orr and Deepa Babington