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Greggs (LSE:GRG) shares are down 8% this morning (4 March) because the FTSE 250 agency launched its outcomes for 2024. And I feel there’s loads for buyers to be involved about.
Plenty of the knowledge had already been launched within the replace from 9 January. However that hasn’t stopped the share worth from dropping additional within the wake of the announcement.
What we already knew: slowing progress
Buyers already knew 2024 had been difficult for Greggs. Gross sales progress got here in at 11.3%, with like-for-like gross sales up 5.5%, however this was properly wanting the 19.6% and 13.7% of 2023.
On high of this, the corporate elevated its retailer rely by 226 models and it intends to maintain opening shops in 2025. Once more, nevertheless the speed of progress is anticipated to be slower.
In 2024, Greggs expanded its retailer rely by just below 10%. The forecast for 2025, nevertheless, is for a rise of between 5% and 6%.
Slowing progress in 2024 was already recognized about earlier than the most recent replace. However the outlook for 2025 by way of buying and selling circumstances additionally seems comparatively weak.
What we’ve came upon: extra challenges
Administration reported that like-for-like gross sales have elevated 1.9% in the course of the first 9 weeks of 2025. That’s under the speed of inflation and – I feel – the largest concern for the corporate.
Roisin Currie – the agency’s Chief Govt – acknowledged that the present setting is hard. In addition to shoppers coping with cost-of-living pressures, Greggs is dealing with increased staffing prices.
To be able to defend its fame as providing good worth to prospects, the enterprise is making an attempt to keep away from growing costs. However that creates strain on margins.
There was, nevertheless, some constructive information for revenue buyers. In step with its earnings progress in 2024, the agency elevated its dividend to 69p for the total 12 months.
Evaluation
Greggs shares have been falling for the reason that begin of 2025 and it’s not laborious to see why. Firstly of the 12 months, the inventory was priced for progress that hasn’t actually materialised.
I believe gross sales have been much less proof against inflationary strain than some buyers might need hoped. In actual phrases, they’ve been adverse for the reason that begin of 2025.
Within the quick time period, the corporate would possibly have the ability to preserve transferring ahead by opening extra shops. However it gained’t have the ability to do that indefinitely and the enlargement price is slowing.
In some unspecified time in the future, the inventory might get to a degree the place it’s good worth regardless of the restricted progress. Buyers have to resolve for themselves the place that’s – I don’t assume it’s right here.
Silly takeaways
Buying and selling circumstances are powerful for Greggs, however I feel there’s cause for optimism. It’s a troublesome setting for the trade as an entire and the corporate is the perfect at what it does.
I anticipate issues to choose up for the enterprise when the financial setting begins to enhance. However that doesn’t look imminent, so I’m not in a rush to purchase the inventory proper now. I don’t assume buyers ought to rush to contemplate it in the present day both.
