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Greggs shares fell as much as 10 percent on Thursday as UK unemployment blamed weak consumer confidence for the quarterly sales slump and warned of budget-related spending increases.
The food-to-go retailer posted a 2.5 per cent rise in like-for-like sales in the final three months of the year, down from 5 per cent in the previous quarter, due to “more subdued high street footfall” and weaker consumer confidence in the run-up to Christmas.
Greggs said its trading performance reflected “a well-publicised more challenging market backdrop in the second half of 2024”. It warned of “further overall cost inflation”, stemming from measures announced in last year’s Autumn Budget.
In November, Deutsche Bank That prophecy Greggs will face an additional £97mn in costs over the next two years as a result of higher employers’ National Insurance contributions and other government announcements, and has downgraded the Newcastle-based group from hold to sell.
Greggs said on Thursday it had shown the ability to “reduce cost inflation in recent years”, with wage growth “should provide support to customers”.
The baked goods retailer said annual sales will reach £2bn for the first time in 2024, up 11.3 per cent year-on-year. However, Deutsche Bank noted that the update reduced like-for-like sales for the ninth straight quarter.
Shares fell as much as 10 percent in morning trading in London on Thursday, to £2.35. Shares in retailers Tesco and Marks & Spencer were also hit by uncertainty over inflation and rising costs, although Tesco reported its “biggest Christmas ever”.
Analysts at Investec said the slowdown at Greggs was more pronounced than expected in the last quarter of 2024 and was “likely to continue” into the first half of 2025.
“In retrospect, it appears [Greggs’] Soft July and August may be more of a trend than a blip,” said analysts at Jefferies.
In a statement, Greggs chief executive Roisin Currie said: “Lower consumer confidence continues to weigh on high street and spending,” adding that the group was nevertheless well-positioned to “meet the headwinds we will see in the year ahead”.
He added that Greggs, which opened 145 new stores a year when closures were accounted for, entered 2025 with “a strong pipeline of new store opportunities”, leaving a total of 2,618.
The group’s update comes after data from earlier this week showed “minimal” growth UK retail sales spending in the final quarter of 2024, which also came in behind the rate of inflation, suggests that consumers have reduced the amount of goods they buy.
