‘Sell’ Greggs shares analysts say after poor results
High street bakery Greggs has reported a double-digit increase in sales for 2024, taking it past the £2bn sales milestone for the first time.
However, its share price fell more than eight per cent in early trades, which analysts attributed to a slowdown in sales growth.
“Profits are up but it’s not the stellar performance the market is used to,” Robinhood UK lead analyst Dan Lane said.
John Moore, senior investment manager at RBC Brewin Dolphin, added: “On the face of it, Greggs is delivering a strong set of numbers – with solid increases across all key financial metrics.”
“However, as we saw with the baker’s last update, behind those headline figures there are concerns about the slowing rate of growth, particularly on a like-for-like basis.”
Panmure Liberum analyst Ben Hunt noted that the group’s reported profit was “a touch ahead of expectations but the good news ends here.”
“We believe volumes have deteriorated further since the fourth quarter and progress in strategic initiatives (evening and delivery) look lack-lustre,” Hunt added.
The analyst reiterated his ‘Sell’ rating on the stock and noted there’s a growing risk the group’s sales begin to shrink in the second half of the year.
A mixed outlook for Greggs
Life-for-like sales in company-managed shops only increased by 1.7 per cent year-on-year in the first nine weeks of 2025, with “challenging weather conditions in January followed by improved trading in February”, the company said.
Total sales rose by 11.3 per cent in the 52 weeks ended December 28, 2024, to £2bn.
Pre-tax profit rose 8.3 per cent to £203.9m, while earnings per share rose 11.1 per cent to 137.5p.
The Newcastle-headquartered bakery said it had recommended a final dividend of 50p per share, with a total ordinary dividend per share of 69p.
“In 2021, we set our sights on doubling sales by 2026 and having a significantly bigger business over the longer term,” CEO Roisin Currie said.
“Three years into this five-year plan, sales are on track and we continue to be confident in the growth opportunity in front of us.
“The brand is in better shape than ever, with a material opportunity to continue growing and developing the Greggs estate and plenty of scope to continue to grow in newer dayparts and channels,” she added.
The chain expects cost inflation of six per cent in 2025, with employment cost inflation the “biggest driver of costs”.
It said that cost inflation unable to be mitigated by savings will be recovered through “careful pricing activity”.
“Greggs just needs to make sure looming employer national insurance contribution cost concerns don’t end up pushing prices beyond customer appetites,” Robinhood’s Dan Lane said.
“There was a huge reaction to January’s decision to raise the cost of a sausage roll by 5p to £1.30, so the customer base is clearly tuned in to the inflationary environment and where they see Greggs in it.”