Greggs returns to sales growth after strategy re-think

* Q3 like-for-like sales down 0.5 pct

* Underlying sales up over 1 pct in last 8 weeks

* Shares up 2.2 pct

LONDON, Oct (KOSDAQ: 039200.KQ - news) 9 (Reuters) - British baker Greggs returned to underlying sales growth in August and September, saying a drive to refocus on its core food-on-the-go business and abandon expansion into new areas such as cafes and supplying more third parties was paying off.

New boss Roger Whiteside, who has issued two profit warnings while undertaking the strategy shift, said on Wednesday the better trading reflected new cakes and pizza ranges, extended shop opening hours, better availability of sandwiches earlier in the day, and the success of a 2 pounds ($3.22) breakfast deal.

"It is encouraging but we are mindful of the fact that trading remains fragile," he said.

Data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of gross domestic product, but retailers remain wary as inflation continues to outpace wage rises.

Even with its relatively low average transaction value of just over two pounds, Greggs (Other OTC: GGGSF - news) , which sells bread, sandwiches, savouries, cakes and pastries to over 6 million customers a week, has not been immune to the downturn.

The company, which with 1,693 shops has more outlets in Britain than burger chain McDonald's, said sales at stores open over a year fell 0.5 percent in the 13 weeks to Sept. 28, its fiscal third quarter.

But Whiteside said like-for-like sales rose just over 1 percent in the final eight weeks of the quarter.

They had fallen 2.9 percent in the first half and then by 3.2 percent in the first five weeks of the second half as a July heatwave kept shoppers off Britain's high streets.

Greggs has not posted a quarterly increase in like-for-like sales since the final quarter of 2011.

At 0925 GMT shares in Greggs, which have fallen 18 percent over the last year, were up 2.2 percent at 436 pence, valuing the business at about 442 million pounds.

Prior to Wednesday's update analysts were forecasting a pretax profit for 2013 of 40-42 million pounds, down from 51.9 million pounds in 2012. Greggs said its outlook for the full year was unchanged.

Greggs is also refitting and re-shaping its store portfolio as it seeks to raise its 12 percent share of Britain's 6 billion pounds food-on-the-go market.

So far this year it has refitted 141 shops and plans 215 in the full year. It now expects no increase in net shop numbers this year as openings match closures.