Greggs has lowered its full-year profit expectations, citing the impact of hotter weather in June on sales and product mix. This announcement led to a substantial drop in Greggs' shares, which were down 40% from their 2025 starting point and at their lowest point since late 2020. Despite this, analysts like Jefferies reiterated their support for the stock, believing the setback is not a reflection of the business's fundamental health. They noted that extreme heat is unfavorable for products like sausage rolls and steak bakes, which are Greggs mainstays.
The company also confirmed it remains on track for 140 to 150 net new store openings for the full year, having expanded to 2,649 shops by the end of June. Greggs’ like-for-like growth slowed to an estimated 1% in June, down from 2.9% reported in May. This follows an earlier trading setback in January 2025, when subdued high street footfall affected fourth-quarter sales figures. The outlook for cost inflation remains unchanged, with planned mitigation measures expected to improve performance in the second half of the year.
While some analysts, such as Jefferies, maintain a positive long-term view, others are more cautious. Shore Capital, for instance, holds a "Hold" recommendation, anticipating that Greggs shares will stagnate. They warned that a combination of weak trading momentum and higher infrastructure costs could lead to no earnings per share growth over the next three years. However, other reports indicate Greggs managed a 6.8% rise in total revenues to $2.2 billion in the 52 weeks to December 27, 2025, driven by store expansion to 2,739 shops and a 2.4% like-for-like growth. Underlying pre-tax profits for 2025 fell 9.4% to $171.9 million, and overall profit before tax sank 17.9% to $167.4 million, due to higher labor, food, and packaging costs. Despite these challenges, Greggs shares defied short sellers, rallying after the announcement of its 2025 results.
Greggs expects input cost inflation to be around 6% in 2025. The company is also making significant investments in a new frozen manufacturing and logistics facility in Derby, set to open in 2026, and a national distribution center in Kettering, expected in the first half of 2027. These investments are projected to create short-term operating margin headwinds of approximately 40 basis points in 2026 and a similar impact in 2027. Despite these costs and a challenging macroeconomic landscape with elevated inflation, Greggs remains confident in its ability to manage headwinds and achieve further progress in 2025, targeting "significantly more" than 3,000 UK shops in the long term, with logistics capacity for 3,500 outlets.
