Greggs, the UK’s biggest bakery chain, has reported slowing sales growth over the festive period, blaming weakening consumer confidence and fewer shoppers on high streets.
The company said its total sales rose by 11.3% to just over £2bn last year. Company-managed shops posted a 5.5% increase in sales at established outlets over the year. However, growth more than halved to 2.5% in the fourth quarter, reflecting “more subdued” high street footfall.
The company’s share price fell by 9% on the update, which analysts at Jefferies described as an “uncharacteristically soft trading performance”.
Roisin Currie, the Greggs chief executive, described a “more challenging market” in the second half of 2024.
Retailers have warned they could be forced to cut thousands of jobs and will have to raise their prices to cope with the rising cost burden of changes announced in October’s budget.
High streets and other shopping destinations had a “drab December”, according to the British Retail Consortium.
“Lower consumer confidence impacted high street footfall and industry-wide visits and expenditure,” Currie said. “Against this challenging backdrop, Greggs maintained its market share of visits, including remaining customers’ number one destination for breakfast, and controlled operational costs well.”
Greggs opened a record 226 shops over the year, closed 28 and relocated 53, and had 2,618 shops trading at the end of December. It is pushing ahead with a further 140 to 150 net openings this year.
It said its festive bake, the vegan festive bake and the new festive flatbread were popular, and that pizza had been selling strongly into the evening.
Greggs stuck to its profit forecast for 2024, but the outlook for this year is more gloomy. Currie said: “Looking into 2025, employment costs will result in further overall cost inflation, although wage increases should provide support to consumers.”
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The UK’s national minimum wage will rise by 6.7% to £12.21 an hour in April, giving more than 3 million low-paid workers a pay rise. Employers’ national insurance costs will also increase, as part of measures designed to plug holes in the public finances.
The Jefferies analysts Andrew Wade and Grace Gilberg said: “In hindsight, it appears the softer July and August may have been more of a trend than a blip.” They expect the slower sales growth to carry on into the first half of this year, and said: “2025 profit before tax growth expectations are likely to need paring back to 5% or lower.”
