Unlock Editor’s Roundup for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Shares in Greggs fell as much as 10 percent on Thursday after the UK baker blamed weak consumer confidence for a slowdown in quarterly sales and warned of budget-related cost increases.
The grocer posted a 2.5 per cent rise in like-for-like sales in the final three months of the year, up from 5 per cent in the previous quarter, due to “lower footfall” and weak consumer confidence on Christmas Eve.
Greggs said its trading performance reflected “a more challenging market backdrop well publicized in the second half of 2024”. He also warned of “further headline cost inflation”, stemming from measures announced in last year’s Autumn Budget.
In November, Deutsche Bank predicted Greggs would face additional costs of £97m over the next two years as a result of higher employer national insurance contributions and other government announcements, and downgraded the Newcastle-based group from holding to sale.
On Thursday Greggs said it had shown an ability to “mitigate cost inflation in recent years”, adding that pay rises should “provide support for customers”.
The baked goods retailer said annual sales hit £2bn for the first time in 2024, up 11.3 per cent year-on-year. However, Deutsche Bank noted that the update marked the ninth straight quarter of slowing like-for-like sales.
Shares fell as much as 10 percent in morning trading in London on Thursday, to £2.35. Shares in retailers Tesco and Marks and Spencer were also hit by uncertainty over inflation and rising costs, despite Tesco reporting its “biggest ever Christmas”.
Analysts at Investec said Greggs’ similar slowdown in the final quarter of 2024 was more pronounced than expected and “likely to continue” into the first half of 2025.
“In hindsight, it appears that (Greggs’) softer July and August may have been more of a trend than a bug,” analysts at Jefferies said.
In a statement, Greggs chief executive Roisin Currie said: “Low consumer confidence continues to weigh on growth and spending on the high street”, adding that the group was nevertheless well positioned “to meet the headwinds we expect to see in the following year”.
She added that Greggs, which opened 145 new stores during the year when closures were counted, leaving it with 2,618 in total, had entered 2025 with a “strong set of new store opportunities”.
The group’s update comes after data earlier this week showed “minimal” growth in UK retail spending in the final quarter of 2024, which also lagged behind the rate of inflation, suggesting consumers cut back on volume of the goods they bought.
