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Greggs (Q3 update 9 October)
A profit warning back in May shook confidence in Greggs and its farinaceous products, and even a rosier first-half update did little to lift sentiment. Hopefully the warm weather will have seen UK shoppers in more of a mood to part with cash in exchange for the firm’s sugary goodies. At fifteen times earnings the shares trade below their five-year average of 17.4, and a 22% rise in annual retail sales for specialist food shops for August could be a sign that the quarter was a better one.
Despite a rebound from the July lows, the shares have refused to try and close the gap created at May’s profit warning. A move above £11.00 would take it above the bottom end of the gap, but above this the downtrend line from the December highs comes into play around £11.25. A decline below the £10.10 lows of August and October would suggest a deeper retracement towards the July low at £9.30.
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