British baker and fast food retailer Greggs is building logistics capacity for a store estate of around 3,500, up from the 2,500 shops it currently trades from, it said on Tuesday.

The company, based in Newcastle, northeast England, is famous for its sausage rolls, steak bakes and vegan alternatives and has proved a resilient performer through the cost of living crisis.

Greggs said it was progressing negotiations on the purchase of land in Corby/Kettering, central England, where it will develop a national distribution centre for chilled and ambient goods. The site will significantly extend its logistics capacity to around 3,500 shops.

Greggs' previously stated target was to eventually trade from "significantly more" than 3,000 shops.

"We're providing capacity for 3,500 because we can actually see a route plan in terms of the (geographical) catchments where we're under represented and also the locations where we're under represented," CEO Roisin Currie told Reuters in an interview.

She highlighted petrol forecourts, retail parks and transport sites as locations of under representation.

Greggs, which recently overtook McDonald's as Britain's No.1 breakfast on-the-go retailer, said its expectations for the full year were unchanged as it reported underlying sales growth of 7.4% for the first 19 weeks of 2024, despite "a challenging market".

It said delivery sales, evening trade and increased usage of the Greggs App all supported volume growth, or the number of items sold.

Greggs noted strong growth from hot food, with pizza boxes, Southern Fried Chicken Goujons and Southern Fried Potato Wedges performing well.

Total sales rose to 693 million pounds ($870 million), versus 609 million a year earlier.

The group has forecast "good progress" in 2024 on the underlying pretax profit excluding exceptional income of 168 million pounds it made in 2023.

Prior to Tuesday's update, analysts were on average forecasting 188 million pounds for 2024, according to LSEG data.

Greggs opened a net 27 new stores in the period and plans 140 to 160 new stores in 2024. It expects cost inflation of 4% to 5% in 2024.

Shares in Greggs were down 1.3%, paring 2024 gains to 8.8%.

 

($1 = 0.7964 pounds) (Reporting by James Davey; editing by Sachin Ravikumar, Jason Neely and Susan Fenton)