Greggs shares drop on sales slowdown and cost inflation warning

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Shares in Greggs fell as much as 10 percent on Thursday as the British baker blamed weak consumer confidence for a slowdown in quarterly sales and warned of rising costs in the wake of the budget.

The grocery retailer posted like-for-like sales growth of 2.5 per cent in the final three months of the year, down from 5 per cent in the previous quarter, due to “lower high street tourism” and weak consumer confidence ahead of Christmas.

Greggs said its trading performance reflected a “more challenging market backdrop well into the second half of 2024.” It also warned of “further overall cost inflation” stemming from measures announced in last year’s autumn budget.

Deutsche Bank in November predicted that Greggs will face an additional £97m of costs over the next two years as a result of employers’ national insurance contributions and other government announcements, and has downgraded the Newcastle-based group from hold to sell.

Greggs said on Thursday it had demonstrated the ability to “moderate cost inflation in recent years”, adding that the wage increase should “support customers”.

The bakery retailer said annual sales would top £2bn for the first time in 2024, up 11.3 per cent year-on-year.However, Deutsche Bank said the update marked the ninth straight quarter such sales have slowed. :

Shares in Tesco and Marks and Spencer were also hit by uncertainty over inflation and rising costs, despite Tesco reporting its “biggest Christmas ever”. :

Analysts at Investec said the Greggs-like slowdown in the last quarter of 2024 was sharper than expected and was “likely to continue” into the first half of 2025.

“In hindsight it is [Greggs’] a softer July and August may have been more of a trend than a slight,” Jefferies analysts said.

In a statement, Greggs chief executive Roisin Currie said: “Lower consumer confidence continues to impact high street traffic and costs,” adding that the group is nevertheless well-positioned “to face the headwinds we expect to see in the year ahead.”

He added that Greggs, which opened 145 new stores during the year after closing, leaving it with a total of 2,618, entered 2025 with a “strong pipeline of new store opportunities”.

The group’s update comes after data from earlier this week showed “minimal” growth Retail spending in the UK in the final quarter of 2024 also lagged behind inflation, suggesting consumers cut back on what they buy.