Greggs shares fall on slowing sales and warning of cost inflation

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Greggs shares fell as much as 10 percent on Thursday, as the British baker blamed weak consumer confidence for slowing quarterly sales and warned of rising budget-related costs.

The food retailer recorded a 2.5 per cent increase in like-for-like sales in the final three months of the year, down from 5 per cent in the previous quarter, due to “weak footfall on the high street”. Weak consumer confidence in the run-up to Christmas.

Greggs It said its trading performance reflects “a more challenging and well-publicized market backdrop in the second half of 2024”. He also warned of “further overall cost inflation”, resulting from measures announced in last year’s autumn budget.

In November, Deutsche Bank Expect it Greggs will face additional costs of £97m over the next two years as a result of higher employers’ National Insurance contributions and other government announcements, and a downgrade of the Newcastle-based group’s rating from hold to sell.

On Thursday, Greggs said it had shown an ability to “mitigate cost inflation in recent years”, adding that pay rises should “provide support to customers”.

The baked goods retailer said annual sales topped £2bn for the first time in 2024, up 11.3 per cent year-on-year. However, Deutsche Bank noted that the update marks the ninth straight quarter of similarly slowing sales.

Shares fell as much as 10 per cent in morning trading in London on Thursday, reaching £2.35. Shares in retailers Tesco and Marks & Spencer were also hit by uncertainty over inflation and rising costs, despite Tesco announcing its “biggest Christmas ever”.

Analysts at Investec said Greggs’ like-for-like slowdown in the final quarter of 2024 was more pronounced than expected, and was “likely to continue” into the first half of 2025.

“In hindsight, it appears that the weakness (Greggs) saw in July and August may have been more of a trend than a blip,” analysts at Jefferies said.

In a statement, Greggs CEO Roisin Currie said: “Lower consumer confidence continues to impact high street footfall and spending,” adding that the group was nonetheless well placed “to weather the headwinds we expect to see in the coming year.”

Greggs, which opened 145 new stores over the year when closures were factored in, leaving it with a total of 2,618 stores, entered 2025 with a “strong pipeline of new store opportunities,” she added.

The group’s update follows data released earlier this week It showed “minimal” growth. In UK retail sales spending in the final quarter of 2024, which also trailed the rate of inflation, suggesting that consumers reduced the amount of goods they bought.