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Shares in UK bakery chain Greggs fell more than 10 per cent on Thursday with the company blaming weak consumer confidence for a slowdown in sales.
In the last three months of the year, Greggs posted a 2.5 per cent rise in like-for-like sales, down from 5 per cent in the previous quarter, because of “more subdued” footfall and consumer confidence in the run-up to Christmas.
The company said that its performance reflected “a well-publicised, more challenging market backdrop in the second half of 2024”. It also warned of “further overall cost inflation”, stemming from measures announced in the budget in October.
In November, Deutsche Bank predicted that Greggs would face an extra £97mn in costs over the next two years because of higher employers’ national insurance contributions and other government policy changes, and downgraded the Newcastle-based group from “hold” to “sell”.
On Thursday Greggs said it had managed to “mitigate cost inflation in recent years”, and added that rising UK wages should “provide support to customers”.
Annual sales topped £2bn for the first time in 2024, an 11.3 per cent increase on the previous year. However, Deutsche Bank noted that the new figures showed the ninth consecutive quarter of slowing like-for-like sales.
Shares in the chain fell more than 10 per cent to £23.50 in morning trading in London on Thursday. Shares in retailers Tesco and Marks and Spencer were also hit by uncertainty about inflation and rising costs.
Analysts at Investec said Greggs’ like-for-like slowdown in the last quarter of 2024 was more pronounced than expected, and was “likely to continue” in the first half of 2025.
In a statement, Greggs’ chief executive Roisin Currie said: “Lower consumer confidence continues to impact high street footfall and expenditure,” adding that the group was nevertheless well positioned “to meet the headwinds we expect to see in the year ahead”.
She added that Greggs, which opened 145 stores over the year to make a total of 2,618, entered 2025 with a “strong pipeline of new shop opportunities”.
The company raised prices by about 4 per cent in response to cost inflation, it said in a press call, but left the prices of some of its cheaper products unchanged.
The update comes after data this week showed “minimal” growth in UK retail sales spending in the final quarter of 2024.
