Greggs shares dive after demand slows during second half of 2024

Greggs shares plummeted on Thursday despite the sausage roll maker reporting its sales surpassed £2billion last year.

Britain’s largest bakery chain blamed subdued consumer confidence and a ‘more challenging market backdrop’ for hitting footfall and spending at its high street outlets during the second half of 2024.

Consequently, like-for-like sales in its company-managed stores rose by only 2.5 per cent in the fourth quarter, half the rise of the prior three months.

Following this announcement, shares in Greggs slumped 14.9 per cent to £22.36 by the late afternoon, making them the FTSE 250 Index’s biggest faller by some margin.

However, the Newcastle-based firm’s strong first-half performance helped its annual turnover exceed £2billion for the first time.

Revenues were around £200million higher than the previous year and more than 70 per cent above their pre-pandemic levels.

Greggs noted pizza boxes and pizza bundle deals experienced greater sales, while its festive bakes and new festive flatbread were popular over Christmas.

There was also healthy demand for its over-ice drinks range, now available in 1,100 shops, far ahead of Greggs’ target to be available in 700 stores by the end of 2024.

The company opened a record 226 new outlets in 2024, taking its total estate to 2,618 establishments as of 28 December. 

It plans to launch another 140 to 150 net new stores this year, including 50 targeted relocations.

Roisin Currie, chief executive of Greggs, said: ‘We continue to broaden our menu and enhance our digital capabilities, whilst also developing our supply chain capacity to deliver our growth strategy.

‘Whilst lower consumer confidence continues to impact high street footfall and expenditure, our value-for-money offer and the quality of our freshly-prepared food and drink position us well to meet the headwinds we expect to see in the year ahead.’

Greggs warned that higher labour costs would result in added cost inflation in 2025, although it said Britons should benefit from higher incomes.

Employers’ national insurance contributions will go up to 15 per cent on staff salaries exceeding £5,000 from April, compared to the current 13.8 per cent rate on wages above £9,100.

In addition, the National Living Wage will rise by 6.7 per cent to £12.21 per hour, and the National Minimum Wage for 18 to 20-year-olds will climb by 16.3 per cent to £10 per hour. 

Roisin Currie said that around two-thirds of Greggs staff have enjoyed a 6 per cent salary hike at the beginning of 2025. 

However, Greggs has subsequently had to raise prices on some products by between 5p and 10p, such as its flagship sausage rolls, which now cost customers £1.30.

Russ Mould, investment director at AJ Bell, remarked: ‘Some people will stomach the higher price, but others will buy less often or not at all, which means Greggs needs to come up with a new game plan.

‘After all, it continues to open new stores, and costs are mounting up. Greggs is good at product innovation and it will be interesting to see if it launches a “cheap treat” item where it can bank on high sales volumes to keep the tills ringing non-stop.’