4 March 2025
If you are covering Greggs’ latest results, please see the following comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
Greggs’ latest results show a strong performance despite the challenges facing the UK retail sector. While sales growth slowed to 2.5% in the final quarter of last year, full-year sales increased by 5.5%, and profits rose by 11%, coming in slightly higher than expected. As the company had warned, trading at the start of 2025 was weaker, with January sales growth slowing to 1.7%. However, sales improved in February, rising to 2.5%.
Looking ahead, Greggs has not given detailed forecasts for 2025, but it remains confident that it can manage rising costs and continue to grow. The company expects its costs to increase by 6%, mainly due to inflation, but says this will be covered by the price increases it introduced last year. Greggs also gave more information about its future profit margins, warning that in 2026 and 2027, higher costs from expanding its manufacturing and distribution operations will have an impact. However, in the longer term, profitability should recover, with its return on investment expected to reach around 20%.
Since the last update in January, Greggs’ share price, like many other UK retailers, has fallen and is now valued at 14.8 times its annual profits, down from 20 times in previous years. Despite this, Greggs remains in a strong position, helped by its plans to open more shops, expand its menu, increase evening trading hours, and grow its digital sales. These initiatives should support further growth, even as the retail sector faces ongoing challenges.
