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Shares in Greggs slumped by as a lot as 10 per cent on Thursday because the UK baker blamed weak shopper confidence for a slowdown in quarterly gross sales and warned of rising Finances-related prices.
The food-to-go retailer posted a 2.5 per cent rise in like-for-like gross sales within the final three months of the 12 months, down from 5 per cent within the earlier quarter, resulting from “extra subdued excessive avenue footfall”, and weak shopper confidence within the run-up to Christmas.
Greggs mentioned its buying and selling efficiency mirrored “a well-publicised more difficult market backdrop within the second half of 2024”. It additionally warned of “additional general value inflation”, stemming from measures introduced in final 12 months’s Autumn Finances.
In November, Deutsche Financial institution predicted that Greggs would face an additional £97mn in prices over the following two years on account of larger employers’ nationwide insurance coverage contributions and different authorities bulletins, and downgraded the Newcastle-based group from maintain to promote.
On Thursday Greggs mentioned it had proven a capability to “mitigate value inflation in recent times,” including wage will increase ought to “present help to prospects”.
The baked items retailer mentioned annual gross sales topped £2bn for the primary time in 2024, rising by 11.3 per cent 12 months on 12 months. Nonetheless, Deutsche Financial institution famous that the replace marked the ninth consecutive quarter of decelerating like-for-like gross sales.
Shares dropped by as a lot as 10 per cent in morning buying and selling in London on Thursday, to £2.35. Shares in retailers Tesco and Marks and Spencer had been additionally hit with uncertainty over inflation and rising prices, regardless of Tesco reporting its “largest ever Christmas”.
Analysts at Investec mentioned Greggs’ like-for-like slowdown within the final quarter of 2024 was extra pronounced than anticipated, and “prone to proceed” within the first half of 2025.
“In hindsight, it seems [Greggs’] softer July and August could have been extra of a pattern than a blip,” mentioned analysts at Jefferies.
Advisable
In an announcement Greggs’ chief govt Roisin Currie mentioned: “Decrease shopper confidence continues to influence excessive avenue footfall and expenditure,” including that the group was however properly positioned “to fulfill the headwinds we anticipate to see within the 12 months forward”.
She added that Greggs, which opened 145 new shops over the 12 months, when closures had been accounted for, leaving it with 2,618 in complete, had entered 2025 with a “robust pipeline of recent store alternatives”.
The group’s replace comes after information earlier this week confirmed “minimal” development in UK retail gross sales spending within the ultimate quarter of 2024, which additionally got here in behind the speed of inflation, suggesting that customers lower the quantity of products they bought.
