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On 2 July, the Greggs (LSE:GRG) share worth 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 arms for 20% lower than at the beginning of July. Its market cap is now half what it was in August 2024.
To evaluate the funding case, I’m going to think about how the baker’s performing towards the 4 key drivers of development that it’s recognized for itself.
1. Rising the property
Greggs is actually not hanging about in relation to opening new outlets. In any case, extra websites equals greater 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. Nonetheless, a timescale has not been specified.
2. Prolonged buying and selling
With so many shops up and down the nation, I think the very best areas have already got a Greggs.
Nonetheless, by opening new premises in locations that allow night buying and selling, it’s doable to draw prospects who may not in any other case be capable to get pleasure from its foods and drinks providing.
3. Digital channels
Greggs makes its merchandise out there through Simply East and Uber Eats.
Through the six months ended 30 June 2025 (H1 25), digital gross sales accounted for six.8% of company-managed store income. This was marginally greater than for a similar interval in 2024 (6.7%).
4. Broadening buyer attraction and driving loyalty
Through the group’s app and thru social media, the baker intends to widen its attraction. And it appears to be doing fairly nicely right here. It’s at present quantity 8 within the Meals and Drink class of Apple’s free app retailer.
So what’s the issue?
However a rising high line — complete 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 guilty. 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% throughout 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 necessary in serving to keep optimistic investor sentiment. When development slows, some will look elsewhere. Additionally, with 100% publicity to the UK, buyers is perhaps nervous that it’s notably delicate to a home slowdown.
Nonetheless, one benefit of the falling share worth 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 are not any ensures in relation to payouts.
But when Greggs can choose up its charge of gross sales development as soon as extra then I’m certain its share worth will reply positively. The inventory’s at present buying and selling on 12.7 occasions its anticipated earnings for 2025. That is barely beneath its three-year common and will suggest that the latest sell-off has been overdone.
In my view, the group has a powerful model and a formidable development story. Most significantly, its shops all the time look busy to me. On steadiness, I feel it’s one to think about.
