Greggs shares tanked on Tuesday after the purveyor of the humble sausage roll said sales growth in early 2025 has slowed to a snails pace.
Following like-for-like 5.5% sales growth in 2024, the baker revealed like-for-like sales for the first nine weeks of 2025 had fallen to 1.7%.
This was too much to bear for some investors who have become accustomed to strong levels of growth and Greggs shares tumbled over 10% in early trade.
“For quite some time it seemed that Greggs could do no wrong,” said Adam Vettese, market analyst at eToro.
“Yet now they have posted another lacklustre update with shares down a whopping 30% this year already. The company blamed challenging weather conditions in January for the slowdown, but aside from the cold snap it is more concerning if there is overall weaker demand for the product.”
Greggs’ success was built on low-cost products, but prices have gradually crept up in recent years. This will play a part in the 11.7% group sales increase over the past year but raises questions about demand going forward.
Inflationary pressures are likely to drag on profits, and Greggs risks having to increase prices further to maintain margins. However, such price hikes will be made against a backdrop of tighter conditions for the consumer, who may not see Greggs as the value option it once was.
“2024 was a year of highs and lows for sausage roll maker Greggs as it surpassed £2bn in revenue for the first time, though conditions deteriorated over the year,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
Record revenue will be of little consequence for investors, with Greggs starting the year on the back foot and key metrics set for a period of depression.
“However, 2025 is shaping up to be a tricky year; consumers are hardly flush with cash, and costs are set to rise as Rachel Reeves’s budget measures take effect,” Britzman said.