Greggs shares fell on warnings of slowing sales and inflation

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Shares in Greggs fell 10 percent on Thursday after the U.K. baker blamed weak consumer confidence for a quarterly sales slump and said it would raise budget-related costs.

The go-to food retailer reported 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 “a more subdued high street footfall” and weak consumer confidence in the run-up to Christmas.

Greggs It said the trading performance reflected “a more challenging market backdrop that is well known in the second half of 2024”. It warned of “further general expenditure inflation” arising from measures announced in last year’s Autumn Budget.

In November, Deutsche Bank He predicted that Greggs expects an extra £97mn over the next two years due to higher employers’ national insurance contributions and other government announcements and has downgraded the Newcastle-based group to sale.

On Thursday, Greggs said it had demonstrated the ability to “reduce inflation in recent years”, adding that wage increases should “provide support to customers”.

The baked goods retailer expects annual sales to top £2bn for the first time in 2024, up 11.3 per cent year-on-year. However, Deutsche Bank reported that the improvement was the ninth consecutive quarter of declining like-for-like sales.

Shares fell as much as 10 per cent to £2.35 in London morning trading on Thursday. Retailers Tesco and Marks & Spencer face uncertainty over rising prices and spending, although Tesco has announced a “big Christmas”.

Investec analysts said the Greggs-like slowdown was more pronounced than expected in the last quarter of 2024 and “is likely to continue” into the first half of 2025.

“In hindsight, (Gregs) July and August may be more of a trend than a blip,” Jefferies analysts said.

Greggs chief executive Roisin Currie said in a statement: “Low customer confidence continues to impact on high road falls and costs.” However, the team is well positioned to meet the headwinds we expect to see next year, he said.

She added that Greggs, which has opened 145 new stores, has a “robust pipeline of new store opportunities” in 2025, leaving a total of 2,618 when closed accounts are counted.

The team’s update comes after information from earlier this week. It showed “minor” growth Retail sales spending in the UK in the final quarter of 2024, which came on the back of inflation which has caused consumers to cut back on the amount of goods they buy.