Could Greggs Be A Post-Lockdown Trading Opportunity?
You could be forgiven for thinking that the UK high street baker, Greggs, has become the default barometer for the health of the non-essential retail sector, as the nation certainly seems obsessed with its sausage rolls and how many it is selling.
The relevance of seeing Greggs in the spotlight so often is that it could present short-term trading opportunities as investors digest each news release about how sales are faring as lockdown restrictions begin to ease.
On The Rise Again
The latest press release from Greggs was an announcement that their sales had risen to a level beyond pre-pandemic levels since they were allowed to open their doors again in the UK on the 12th of April.
Having witnessed a drop in like-for-like sales of 13.5% in the first four months of the year as a result of the pandemic changing the retail landscape, Greggs seems to have hit the ground running and is reporting positive growth signs.
The pent-up demand for retail seems to have been reflected in the sales performance of Greggs since their re-opening in April, with the company generating sales of £352 million in that 18-week period.
This means that they have improved their numbers by £72 million compared to the same period the year before and only fell £21 million short of the £373 million they achieved in that trading period back in 2019.
Uncertain Trading Conditions
The regular news cycle relating to Greggs and its position as a guide to the health of the high street makes it an interesting day trading stock, with price movements reflecting sales figures and trading updates.
The roadmap that the government has revealed for opening up the whole of the UK economy again is clearly pivotal to how shares like Greggs manage to perform over the coming weeks and months.
Greggs has stated that such unprecedented trading conditions make it challenging to predict how their sales performance will fare, but the share price has recently spiked by 8% in reaction to the trading update. The share price is now at a record high of 2572p, surpassing the previous best of 2553p.
This could present a potential opportunity for trading the shares if you believe that Greggs could deliver even better sales, or maybe you believe that the optimism is overcooked.