Sales Slump Sends Greggs Shares to Two-Year Low

Greggs, the UK's largest bakery chain, has seen its share price tumble after reporting a slowdown in sales growth. The FTSE 250 retailer, known for its popular sausage rolls and steak bakes, revealed that like-for-like sales at its company-managed stores rose by just 1.7 per cent in the first nine weeks of 2024, a sharp decline from the 8.2 per cent growth recorded in the same period last year.

The company attributed the slump to poor weather conditions in January, which forced temporary store closures. This follows an already weaker final quarter of 2023, where sales growth fell to 2.5 per cent from 5 per cent in the previous quarter.

Consumer Caution Weighs on Sales

Greggs' Chief Executive, Roisin Currie, pointed to subdued consumer confidence as a key challenge, citing a shift in spending habits. "People are saving more than they are spending," she explained. "It's been a challenging winter, and I think we'll continue to see that for now."

Investor concerns about the bakery giant's slowing momentum sent its share price down 11.5 per cent, shedding 240p to hit a two-year low of £18.42 by midday on Tuesday. The stock has already fallen by almost a third over the past year.

Ben Hunt, an analyst at Panmure Liberum, suggested that Greggs may struggle to meet consensus forecasts of 3.5 per cent like-for-like sales growth for the year. He noted that to achieve this, the company would need to sustain an average growth rate of 3.9 per cent for the remaining 43 weeks of 2024—an ambitious target given current conditions.

Strong Annual Results Overshadowed by Market Concerns

Despite the disappointing start to the year, Greggs reported record annual revenues, surpassing £2 billion for the first time in its history. Sales for the 12 months to 28 December grew by 5.5 per cent year-on-year, even as the food-to-go market faced mounting pressure.

Underlying pre-tax profits rose by 13.2 per cent to £189.8 million, slightly exceeding analyst expectations. Shareholders are set to benefit from a final dividend of 50p per share, bringing the total annual payout to 69p—a rise of 11.3 per cent compared to the previous year.

Expansion has driven Greggs' revenue growth, with 226 new stores added in 2023, bringing the company's total estate to 2,618 outlets. Greggs remains optimistic about its long-term prospects, reiterating its ambitious target of more than 3,000 stores nationwide. The company plans to open between 140 and 150 new locations in 2024, reinforcing its commitment to growth despite economic headwinds.

Navigating Inflationary Pressures

Greggs has also taken steps to offset rising costs. The price of its iconic sausage roll has climbed to £1.30, reflecting the ongoing impact of wage increases and food price inflation. While Currie reassured customers that further price hikes were not planned, she acknowledged that the company must remain adaptable. "We have stayed in an inflationary environment, so we have to make sure we react appropriately across the year's balance," she said.

Digital and Evening Sales on the Rise

Greggs has also continued to expand its digital presence, with its loyalty app playing a growing role in its retail strategy. Last year, 20 per cent of transactions involved using its rewards programme, up from 12.5 per cent in 2023.

The company has also seen significant growth in its evening trade, with sales after 5 pm now accounting for 9% of total company-managed store revenues. This shift suggests that Greggs' strategy of catering to later-day dining habits is yielding results, even as broader sales growth slows.

A Legacy of Resilience

Founded in 1939 by John Gregg as a small bakery on Tyneside, Greggs has grown into one of the UK's most recognisable high-street brands. The company, which first floated on the stock market in 1984, pledged in 2021 to double sales by 2026.

While the latest figures have cast some doubt on its ability to maintain its rapid pace of growth, Greggs remains confident in its long-term vision. The coming months will determine whether its expansion strategy, pricing decisions, and digital transformation efforts can counteract economic pressures and revive investor confidence.