Important information - the value of investments and the income from them can go down as well as up, so you may get back less than you invest.

From the humble sausage roll proffered by Greggs to premium food products from M&S, the cost-of-living crisis has thrown up a varied array of winners. But as the dust settles and hopes grow of an easing in inflation just what’s around the corner? 

Here is a round-up of some of the stocks to keep an eye on in March as these companies issue their latest results or trading updates. 

This is not a recommendation to buy or sell these investments and is purely insight into some of the companies that will be announcing results this month. 

Greggs  

It’s hardly a surprise really that the humble sausage roll swiftly became the go-to of the cost-conscious consumer and simultaneously made a cost-of-living saviour of Greggs. The cash-strapped have consistently sought solace in cheap and comforting food and Greggs has delivered as the cost-of-living crisis has rumbled on.    

We’ll see exactly how Greggs’ fayre has fared when the pasty-to-pizza pedlar sets out its full year results on 5 March, but all the signs so far are that sales have remained on a roll. Giving an update on total sales for 2023 it showed a 19.6% rise on the previous year to £1.8bn, with shop like-for-like sales up 13.7%. 

Falling price inflation has had an impact. Fourth quarter like-for-like sales growth across its own-managed shops slowed to 9.4%, compared with 13.7% in the previous three months, but Greggs is confident that its stable cost base and an easing of inflationary pressure on consumers’ wallets in the coming year will help. 

Greggs’ performance has been nothing short of impressive, but then this budget-friendly brand has never had modest ambitions. A plan to move into prime central London locations and take its vegan sausage rolls to tourists and late-night revellers in Leicester Square was bold - and has worked. So too has targeting travellers who feel peckish as they pass through Birmingham and Liverpool airports. 

In fact, as it turned out, Greggs has surpassed even its own grand plans to serve up a total of 150 net openings in 2023. It ended the year with a record 220 new shops opened last year, alongside 33 closures and 42 relocations.  

The group now has 2,473 shops, which means that Greggs is perfectly positioned to cater to cash-conscious customers up and down the country. 2024 is likely to see more investment in its shops and further expansion of its supply chain. “Significantly more” than 3,000 shops is now on its wish-list. 

Greggs is increasingly catering for the after-4pm, post-work/night-out crowd too and a growing delivery service taking pizza and chicken goujons to the hungry hordes. And, as chief executive Roisin Currie has commented, wage inflation will put more money in consumers’ pockets, which can only be a good thing for Greggs. Even if, as she also acknowledges, that will have a knock-on effect on the business as 40% of its costs go on wages. 

Last year was a good one for shareholders too. A final dividend of 44p a share taking the total pay out for the year to 59p, topped the year before’s special divi pay out. You would think those past two years would be hard to match, but many think something just as savoury is pretty much baked in for 2023 after such a tasty rise in sales and the positive outlook in the near-term. 

Greggs full year results are due out on 5 March. 

Domino’s Pizza 

In the face of uncertainty, reassuring familiarity and simplicity is often what’s needed most. So perhaps it’s little surprise that Domino’s Pizza sales have boomed in the past few years. 

The clear market leader in takeaway pizza, Domino’s has grown its slice of the market, despite the arrival of competitors. But has it retained its position? In November it reported a fall in meal deliveries in the third quarter as customers cut back on ordering in.  

Domino’s said while its like-for-like system sales were up 3.7% in the third quarter, total orders were down 1.2% to £16.7 million in the third quarter. Two years ago the same period brought in sales totalling £375.8 million. 

The company says 2023 underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) will come in between £132m and £138m.  

Looking to 2024, easing inflation could prove to be balance sheet-boosting for the pizza maker and with around 1,200 stores across the UK and Ireland, including 104 sites in London alone, it has some big expansion plans on the table for the year ahead. 

Domino’s is expanding its footprint across the UK, ensuring more areas are covered by an outlet, which will likely lead to additional revenues in the future. 

Domino’s has suffered a high level of management turnover in recent years, but its latest chief executive Andrew Rennie knows Domino’s having been involved with the business for 30 years, including 10 as a franchisee. 

This experience may come in useful. Like many of the big fast-food brands, Domino’s operates on a franchise system, with the majority of its UK stores operated by franchisees. However, the company’s relationship with its franchisees hasn’t always been happy. The two sides have disagreed on profit sharing in the past, which has slowed down new store openings.  

Interesting to note too that while an important part of the Domino’s model, in reality only £84m of the £655m of revenue generated in the 12 months to June 2023, for example, came from franchise royalties. The other £455m-plus came from its supply chain business.  

This part of its business model, known as vertical integration, means that Domino’s owns the whole process, from making dough in factories to delivering pizzas to customers - selling franchisees pretty much all of the food and consumables they need to operate their stores and produce pizzas. 

This approach gives the company close control over its product, service quality and pricing. It also allows Domino’s to keep the profit margin that would otherwise be earned by external suppliers. 

Rennie could very well possess the “secret sauce” Domino’s needs to see it through any lingering cost-of-living pressures and any residual issues with franchisees. And shareholders will no doubt be looking to him to return Domino’s UK operations to growth. 

Domino’s Pizza full year results are expected to be out on 12 March. 

Next  

Next has long been something of a bellwether of middle England consumer spending, definitely not high-end, but not fast-fashion level either, it has been a steady performer while the cost of living has increased.

Now, with the prospect of interest rate cuts somewhere on the horizon and historically modest rates of unemployment here in the UK, there’s little to suggest any consumer belt-tightening is likely to take place in its core demographic, so it should remain a case of business as usual - if not potentially even a-little-better-than-usual - at Next.

Next’s latest trading update showed that full-price sales rose by 5.7% in the nine weeks to the end of December. That topped the company’s previous guidance of 2% by a good few percentage points and prompted an increase in its own expectations for the full year.  

Next now expects pre-tax profits to come in at £905m in the year to January 2024, which is £20m higher than its previous estimate and represents 4% growth. And for the current financial year, it forecasts that pre-tax profits will rise by 5%. 

Notable is its online success. While the pandemic boom in online trade has ended drastically for some, that’s not the case for Next. Its online sales rose by 9.1% in the nine weeks to the end of December, while its in-store sales were just 0.6% higher than in the same period the previous year.  

While the main Next brand itself is relatively mature and has a sizeable market share across several categories, it’s Next’s investment in its online infrastructure, along with significant and sustained investment in warehousing and logistics, that could really start to pay off. As could its strategy of investing in third-party brands.   

Next full year results are due out on 21 March. 

JD Wetherspoon  

JD Wetherspoon’s chair Tim Martin has a habit of tipping a lukewarm pint of misery over each company announcement. It was the same when the pubs chain announced a strong Christmas trading period, when sales growth that outstripped the market yet again.   

In its trading update ahead of its half-year results, due to be released on 22 March, the company revealed that like-for-like sales rose 15.2% in December, an outperformance of the market for the 16th consecutive month. Wetherspoon sales were up 10.1% in the 25 weeks to 21 January compared with last year, improving to 11.1% in the second half of the period, with bar sales growing at the fastest pace. Food sales also rose, by 7.9%.  

Mr Martin brought up his usual grumble about tax discrepancies between pubs and supermarkets and threw in a warning about ongoing cost pressures for good measure.  

However, despite this, management expects full-year trading to be in line with market expectations, of forecast annual sales of £2.03bn and a pre-tax profit before separately disclosed items of £68m.   

Worth keeping an eye on is Wetherspoon’s property sales and purchases. In the year to date, the pub group has been a net disposer of pubs. Two have been opened, but five have been sold, and eight leasehold properties have been surrendered or sublet.  

JD Wetherspoon half-year results are out on 22 March. 

Ocado  

Ocado isn’t involved in just any old row, it’s embroiled in a growing row with M&S over performance. Now Ocado has threatened to sue M&S over the disagreement, or rather the fact that M&S is “positively dissatisfied” with Ocado Retail's performance and will not automatically pay a final instalment of £191m to Ocado. 

This a is a distinctive souring of what had been the start of a positive partnership, with M&S products defying sceptics by proving to be more popular than those of Waitrose, Ocado’s previous partner. But that initial surge in sales has struggled to keep up the pace it enjoyed when online sales boomed during the pandemic. 

Over the past year Ocado has managed to narrow its pre-tax losses and deliver positive adjusted profits, with sales exceeding analyst forecasts by 12%. 

The company reported a pre-tax loss of £403.2 million for the 53 weeks to 3 December, trimmed from losses of £500.8 million a year earlier. That was its biggest loss in its 23 years of trading. 

The latest figure also comes in slightly better than the £410 million loss predicted by analysts. Revenue climbed to £2.83 billion, exceeding the company-compiled consensus of £2.76 billion. 

The latest report just out from Ocado does show a slight improvement on its path to profitability, but it’s still a long way from its lockdown “glory days”. 

Aside from Ocado Retail, which it jointly owns with Marks & Spencer, Ocado’s Technology Solutions and Logistics divisions both delivered adjusted profits, contributing to the company’s overall positive adjusted earnings. But, despite positioning itself as a technology company, its retail division still accounts for the lion’s share of its revenue. 

Looking ahead, Ocado says it remains confident and is expecting to see continued sales growth in 2024. However, the company acknowledges that lower average selling prices due to subsiding food inflation might hold back revenue growth to a mid-to-high single-digit percentage. Although that should be helped by an easing of UK food inflation. According to the latest data from the British Retail Consortium, that is now at its lowest rate for almost two years, with meat, fish and fruit prices falling month-on-month in February.  

Ocado’s shares rose sharply last year amid speculation that Amazon was considering a takeover bid as part of a plan to expand its grocery business. But there’s the possibility that those rumours could restart as its share price performance could once again make it a potentially attractive target for acquisitive rivals. 

Ocado Q1 trading update is due out on 26 March.

Five-year share price performance table

(%) As at 29 Feb 

2019-2020 

2020-2021 

2021-2022 

2022-2023 

2023-2024 

Greggs 

21.1 

-0.2 

24.1 

12.0 

1.7 

Domino’s Pizza 

32.0 

7.3 

23.2 

-19.2 

21.5 

Next 

23.0 

24.3 

-7.3 

2.9 

25.1 

JD Wetherspoon 

3.3 

-8.0 

-29.1 

-35.8 

34.8 

Ocado 

2.9 

106.8 

-37.6 

-60.0 

-6.8

Past performance is not a reliable indicator of future returns 

Source: FE, as at 29.2.24 Basis: Total returns in GBP. Excludes initial charge.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. 

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