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Shares in British bakery chain Greggs fell more than 10 percent on Thursday, with the company blaming weak consumer confidence for slowing sales.
In the last three months of the year, Greggs saw a 2.5 percent rise in like-for-like sales, down from 5 percent in the previous quarter, due to “weaker” footfall and consumer confidence ahead of Christmas.
The company said its performance reflected a “well-publicized, more challenging market backdrop in the second half of 2024.” It also warned of “further overall cost inflation”, stemming from measures announced in October’s budget.
In November Deutsche Bank predicted that Greggs would face additional costs of £97m over the next two years due to higher employers’ National Insurance contributions and other government policy changes, and downgraded the Newcastle-based group from “hold” to “sell”.
On Thursday, Greggs said it had managed to “mitigate cost inflation in recent years” and added that rising UK wages should “support customers”.
Annual sales will exceed £2 billion for the first time in 2024, an increase of 11.3 percent year-on-year. However, Deutsche Bank notes that the new figures show the ninth consecutive quarter of slowing like-for-like sales.
Shares in the chain fell more than 10 percent to £23.50 in morning trading in London on Thursday. Shares in retailers Tesco and Marks and Spencer were also hit by uncertainty over inflation and rising costs.
Investec analysts said Greggs’ similar slowdown in the final quarter of 2024 was more pronounced than expected and was “likely to continue” in the first half of 2025.
In a statement, Greggs chief executive Roisin Currie said: “Lower consumer confidence continues to impact footfall and high street spending”, adding that the group was nevertheless well placed “to face the headwinds we expect in the coming year”.
She added that Greggs, which opened 145 stores during the year for a total of 2,618, entered 2025 with a “strong pipeline of new retail opportunities”.
The company raised prices by about 4 percent in response to cost inflation, it said in a press call, but left the prices of some of its lower-priced products unchanged.
The update comes after this week’s data showed “minimal” growth in UK retail spending in the last quarter of 2024.
