Greggs reports slower quarter of sales

Greggs PLC reported a deceleration in Q3 sales growth, with total sales increasing 6.1% and like-for-like sales up 1.5%, both below H1 performance. Despite this slowdown, which followed heat-impacted trading in July but improved through August and September, the bakery chain affirmed its full-year outlook remains unchanged, while also slightly reducing its net new shop opening target to 120 and continuing strategic investments in new supply chain capacity.

Analysis

Greggs PLC has reported a tangible deceleration in sales growth for the third quarter, a key concern for near-term momentum. Total sales growth slowed to 6.1% from 7% in the first half, but more critically, like-for-like sales in company-managed shops fell to 1.5% from 2.6% over the same period, indicating a notable slowdown in underlying consumer demand. While the company attributes some of this weakness to heat-impacted trading in July, the performance highlights sensitivity to external factors. In a further sign of moderated expectations, the forecast for net new shop openings has been slightly reduced to 120 for the year, citing a shift in the timing of opportunities. Despite these headwinds, management's decision to reaffirm its full-year guidance is a significant signal of confidence, suggesting either a strong recovery in August and September, an anticipated robust Q4, or effective cost controls. The ongoing strategic investments in supply chain capacity, with automated facilities due in 2026 and 2027, reinforce a commitment to long-term efficiency and growth, though these benefits are not immediate.

Key Decisions for Investors

• Investors should weigh the clear slowdown in Q3 like-for-like sales against management's confidence in its unchanged full-year guidance, which implies a required acceleration in performance for the final quarter.
• The slight downward revision of the net new shop opening target to 120 warrants monitoring as a potential leading indicator of execution headwinds or a more cautious capital deployment strategy.
• For long-term investors, the ongoing supply chain investments remain a key positive, but it is critical to assess whether near-term consumer demand weakness could impact the funding and timeline of these strategic projects.