Greggs plummets to two-year low as sales turn 'even more negative'
Published: 03:32 04 Mar 2025 EST
Shares in Greggs PLC (LSE:GRG) fell almost 10% to a two-year low of 1,865p on the back of its results, which showed sales growth continuing to cool after prices were hiked late last year.
Results for 2024 showed like-for-like sales growth slow to 1.7% year-on-year in the first nine weeks of 2025, from 2.5% in the fourth quarter of last year.
Analyst Ben Hunt at Panmure Liberum said slowing growth suggested volumes were likely to be "even more negative" than they were in the fourth quarter, given recent price hikes.
Greggs' management expects cost inflation of 6% this year, with a combination of price increases and cost efficiencies expected to keep profits up.
Hunt said he believes City consensus expectations for around 3.5% LfL sales growth for this year and the medium term "will be challenging", given the current depressed run rate and his view that evening trading is "not resonating with customers (neither is delivery)".
He forecasts LfL growth of 2% this year, "but we would highlight that should LfLs turn negative in FY25 – a risk we see as plausible – cash preservation would come to the fore given elevated capex plans".
On the plus side, the analyst said underlying pre-tax profit growth of 13.2% to £189.8 million was "a touch ahead" of expectations, which appears to be a function of lower interest costs and a stronger than expected gross margin performance.
He noted that full-year gross margins increased 100bps, implying a stronger second half following price hikes to recover cost inflation and after the first half was impacted by an extension of the delivery partnership with Uber Eats that ended a previously exclusive agreement with Just Eat.
