UK's best-loved sausage roll seller plunges 15% as heatwave hurts sales

U.K. baker Greggs' shares plunged 15% after it warned that unusually hot June weather dented customer footfall and like-for-like sales, potentially leading to full-year operating profit modestly below 2024 levels. Despite first-half total sales reaching £1.03 billion, the company cited the heatwave's impact on demand for its core hot products. Analysts suggest this sales dip, while attributed to weather, may also signal broader consumer spending pressures, raising concerns about the long-term resilience of Greggs' value proposition.

Analysis

Greggs experienced a significant 15% share price decline following a trading update that revised its full-year profit outlook. The company attributed a slowdown in June's like-for-like sales to unseasonably hot weather, which it claims reduced overall customer footfall despite increasing demand for cold drinks. While total sales in the first half of 2025 grew to £1.03 billion from £961 million in the prior year, like-for-like growth was a more modest 2.6%, weakened by the June performance. Consequently, Greggs warned that full-year operating profit could fall "modestly below" 2024 levels. However, external analysis from eToro suggests the weather may not be the sole factor, positing that a "stretched consumer" facing inflationary pressures could be eroding Greggs' value proposition. This raises a critical question about whether the sales dip is a temporary, weather-related anomaly or an early signal of weakening consumer discretionary spending. Despite these near-term headwinds, the company affirmed its commitment to its expansion strategy, targeting 140 to 150 net new store openings for the year.

Key Decisions for Investors

• Investors should scrutinize the upcoming interim results at the end of July for specific sales mix data to determine if the slowdown was confined to hot food, which would support the company's weather-based explanation.
• The profit warning necessitates a re-evaluation of valuation models, as full-year operating profit is now guided to be below the previous year, directly impacting earnings forecasts.
• Consider the analyst's view that weakening consumer health is a primary driver; monitor broader U.K. consumer confidence and retail sales data to assess if this is a company-specific issue or a wider market trend.
• Weigh the negative short-term guidance against the company's unchanged, aggressive store expansion plan, as this presents a conflict between current performance and long-term growth ambitions.