Greggs shares fall 4% after weak H1 sales and no upgrade to 2025 outlook

Greggs shares fell over 4% after the UK food retailer reported first-half like-for-like sales growth of 2.6%, in line with prior guidance, but maintained its full-year pre-tax profit forecast of £175 million. The company noted sales were impacted by weaker market footfall and weather disruption. Despite the immediate market reaction, Jefferies analysts highlighted the underlying business strength and viewed the stock, down 40% year-to-date, as an attractive entry point anticipating an acceleration in second-half like-for-like sales.

Analysis

Greggs (LON:GRG) shares declined over 4% despite the company reporting first-half like-for-like sales growth of 2.6%, a figure that was in line with prior guidance. The negative market reaction appears linked to the company maintaining, rather than upgrading, its full-year pretax profit forecast of £175 million, coupled with cited headwinds from weaker market footfall and weather disruptions. This performance comes after a profit warning for fiscal year 2025 was issued in early July, setting a cautious tone. However, underlying strategic initiatives show positive momentum; evening sales have grown to 9.3% of total revenue from 8.4% a year prior, and digital engagement has strengthened, with app usage accounting for 26% of transactions, up from 18%. The company also reaffirmed its expansion plans to open 140-150 net new shops this year. Contrasting the market's sentiment, analysts at Jefferies view the stock's 40% year-to-date decline as an attractive entry point, anticipating an acceleration in like-for-like sales in the second half based on what they see as a fundamentally strong business.

Key Decisions for Investors

• Given the stock is down 40% year-to-date, value-oriented investors might consider the current price an attractive entry point, aligning with the Jefferies view that a second-half sales acceleration is likely.
• More cautious investors should monitor for evidence of a recovery in footfall and an improvement in like-for-like sales trends before committing new capital, as the company has confirmed near-term pressures and previously warned on FY2025 profits.
• Investors should track the performance of strategic growth drivers, specifically the contribution from evening trading and the pace of the new store rollout, as these are key to validating the long-term expansion thesis.