Greggs’ shares were down around 50% from their 2024 peak going into the release of today’s interim results. The baker provided little reason to start buying back into the stock on Tuusday and shares sank another 5% following the release.
Total first-half sales rose 7.0%, driven by like-for-like growth of 2.6% in company-managed shops and 4.8% in franchised outlets.
However, investors will be disappointed to see that operating profit fell 7.1% to £70.4 million, whilst profit before tax dropped 14.3% to £63.5 million. The company maintained its interim dividend at 19.0p per share.
Performance was hindered by reduced foot traffic, weather disruptions, and cost pressures.
Greggs expanded its estate by 31 net new shops, bringing the total to 2,649 outlets, and the company remains on track for 140-150 net openings in 2025, with longer-term potential for over 3,000 UK shops.
The firm said the expansion continues beyond traditional high street locations to increase convenience and customer accessibility. One would expect to see more petrol stations and train stations hosting a Greggs in the coming years. Whether this will provided the much need boost to profitability remains to be seen.
Greggs is also looking beyond its outlets to consumers’ shopping baskets. September 2025 will see Greggs launch its frozen ‘Bake at Home’ range through Tesco, complementing its existing Iceland partnership. Menu innovation focuses on healthier options, including Plenish health shots and Greek-style yoghurt, competitive breakfast and lunch deals, and growth in pizza and iced drinks categories.
“Greggs’ appetite for expansion appears undimmed despite some worrying signs in the latest results,” said Chris Beauchamp, Chief market analyst at IG.
‘Shareholders might wonder whether the continued push to add new lines is really adding much other than complexity, especially when the group remains subject to the vagaries of the British public’s spending habits. We seem well past peak Greggs euphoria, but at 11 times earnings the shares look to have plenty of upside baked in.”