Greggs delivered strong revenue growth and accelerated same-store sales, despite macro headwinds and cost pressures, supporting my continued bullish stance. Store expansion remains robust, with 140-150 new openings targeted for FY 2025, and innovative menu additions are driving incremental sales. Shares remain undervalued, trading at significant discounts to industry multiples on EV/S, EV/EBITDA, and P/CF, with a 42% upside potential.
The U.K. bakery chain's sales rose 7.4% in the first 20 weeks of the year.
Greggs PLC (LSE:GRG) shares jumped 5.8% but analysts said the improved growth in recent week was not as good as it looked under the lights of the heated display cabinet. The 2.9% growth in the second quarter, up from 1.7% in the first, is only positive "on the surface", said analysts at Peel Hunt.
Greggs PLC (LSE:GRG) reported an improvement in sales growth in recent weeks, which it attributed to "better trading conditions" and product innovation. Total sales were up 7.4% to £784 million in the first 20 weeks of 2025, with like-for-like growth of 2.9%.
Greggs is a promising investment due to its significant valuation drop, attractive 3.7% yield, and reliable earnings trends. The company has successfully transitioned from traditional baked goods to a "food on the go" model, enhancing its market position. Greggs operates over 2,000 outlets with an omnichannel approach, including click & collect and drive-through, employing over 20,000 people.
Deutsche Bank has cut its price target for Greggs PLC (LSE:GRG) from 2000p to 1330p and reiterated its ‘sell' rating, arguing that the bakery chain has gone ex-growth. The bank warns that Greggs faces a period of slowing like-for-like sales, rising costs, and ongoing margin pressure as it ramps up production at two new sites in the Midlands.
Deutsche Bank has issued a sell recommendation on Greggs PLC (LSE:GRG), citing concerns over slowing like-for-like sales growth and pressure on profit margins. The bakery chain's latest results showed underlying profit before tax of £190m for 2024, up 13% and slightly ahead of consensus expectations.
Shares in Greggs PLC (LSE:GRG) fell almost 10% to a two-year low of 1,865p on the back of its results, which showed sales growth continuing to cool after prices were hiked late last year. Results for 2024 showed like-for-like sales growth slow to 1.7% year-on-year in the first nine weeks of 2025, from 2.5% in the fourth quarter of last year.
Greggs PLC has reported a further slowing in sales growth in the early weeks of 2025, but said it was confident it can “manage inflationary headwinds” and deliver progress. Like-for-like sales were up 1.7% year-on-year in the first nine weeks of 2025, with the baker blaming weather conditions in January, but it said trading had improved in February.
Abrdn, Flutter and Greggs are among a spate of firms set to update on a packed Tuesday ahead.
Greggs, originally a small bakery, has grown to over 2,500 stores by shifting focus to takeaway food and leveraging efficient operations. The company aims to reach 3,000 locations while improving night shifts, extending hours, and enhancing service channels, including third-party delivery platforms. Despite rising costs, Greggs maintains strong financial health with no long-term debt, reinvesting heavily to sustain growth and improve value-per-pound metrics.
British bakery chain Greggs has got off to a rough start this year, with the shares down around 25%. This is an objectively good business facing some near-term headwinds, but longer-term prospects are brighter. In exchange for near-term risks, investors are being offered a sizable discount to the stock's historical average P/E.