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On 2 July, the Greggs (LSE:GRG) share value crashed 15% as buyers took a dislike to the pie and sausage roll maker’s newest buying and selling replace. Since then, it’s been in gradual decline. On the time of writing (1 September), the inventory’s altering palms for 20% lower than at first of July. Its market cap is now half what it was in August 2024.
To evaluate the funding case, I’m going to contemplate how the baker’s performing towards the 4 key drivers of development that it’s recognized for itself.
1. Rising the property
Greggs is definitely not hanging about in the case of opening new outlets. In any case, extra websites equals larger income.
On 2 January 2021, it operated 2,078 shops. By 28 June 2025, this had elevated by 27% to 2,649. The group has plans to develop this to “considerably extra” than 3,000. Nevertheless, a timescale has not been specified.
2. Prolonged buying and selling
With so many shops up and down the nation, I believe the very best areas have already got a Greggs.
Nevertheless, by opening new premises in locations that allow night buying and selling, it’s potential to draw clients who won’t in any other case be capable to take pleasure in its foods and drinks providing.
3. Digital channels
Greggs makes its merchandise obtainable through Simply East and Uber Eats.
In the course of the six months ended 30 June 2025 (H1 25), digital gross sales accounted for six.8% of company-managed store income. This was marginally larger than for a similar interval in 2024 (6.7%).
4. Broadening buyer enchantment and driving loyalty
By way of the group’s app and thru social media, the baker intends to widen its enchantment. And it appears to be doing fairly effectively right here. It’s presently quantity 8 within the Meals and Drink class of Apple’s free app retailer.
So what’s the issue?
However a rising prime line — whole gross sales have been up 7% in H1 25 — isn’t translating into improved earnings.
Working revenue was 7.1% decrease and pre-tax earnings fell 14.3% in comparison with H1 24. A few of this was because of the timing of prices however “difficult” market situations and climate disruption have been additionally in charge. Working revenue in 2025 is now anticipated to be “modestly beneath” that achieved in 2024.
And though like-for-like gross sales elevated 2.6% in the course of the quarter, the speed of development was slower in comparison with the identical quarter in 2024. For Greggs, that’s an issue. Momentum is so essential in serving to keep constructive investor sentiment. When development slows, some will look elsewhere. Additionally, with 100% publicity to the UK, buyers is likely to be fearful that it’s significantly delicate to a home slowdown.
Nevertheless, one benefit of the falling share value is that the inventory’s yield has elevated. Based mostly on quantities paid over the previous 12 months, it’s now as much as 4.3%. In fact, there aren’t any ensures in the case of payouts.
But when Greggs can choose up its fee of gross sales development as soon as extra then I’m certain its share value will reply positively. The inventory’s presently buying and selling on 12.7 occasions its anticipated earnings for 2025. That is barely beneath its three-year common and will indicate that the latest sell-off has been overdone.
In my view, the group has a robust model and a powerful development story. Most significantly, its shops all the time look busy to me. On steadiness, I feel it’s one to contemplate.
