Investing.com -- Greggs PLC (LON:GRG) saw its shares drop more than 8% in early trading on Tuesday after reporting a further slowdown in sales growth.
Like-for-like sales in company-managed shops rose by 1.7% in the first nine weeks of 2025, a noticeable deceleration from the 5.5% growth recorded for the whole of 2024.
The UK bakery chain blamed poor weather in January for the softer performance, though it noted that February’s trading was more in line with expectations.
RBC Capital Markets had forecast a 2.5% increase for the first quarter, indicating that Greggs still has ground to make up.
Despite the sluggish start to the year, Greggs reiterated its confidence in managing inflationary pressures and continuing its expansion.
The company maintained its target of opening 140 to 150 new shops in 2025, following the addition of 145 locations last year. The company sees room for well beyond 3,000 outlets across the UK.
The company’s full-year 2024 results were largely in line with previous guidance, with revenue reaching £2.014 billion. Underlying operating profit stood at £195.3 million, slightly above RBC Capital Markets’ estimate of £194.1 million, while pre-tax profit came in at £189.8 million. Greggs finished the year with a net cash position of £125.3 million.
Operationally, the company saw continued growth in its evening trade, which made up 9% of company-managed shop sales in 2024, up from 8.5% the year before.
Delivery sales also rose to 6.7%, compared with 5.6% in 2023. The Greggs app is playing an increasingly central role in the company’s business, now accounting for 20% of transactions in company-managed shops.
RBC Capital Markets acknowledged that current trading conditions are challenging, but it remains positive on Greggs' long-term outlook.
Concerns over weakening consumer spending and rising labor costs remain risks, but RBC expects Greggs to navigate these pressures and maintain its growth trajectory.