Greggs shares are falling after demand declines in the second half of 2024
- The company’s annual turnover was approximately £200 million higher than the previous year
Greggs Shares fell on Thursday, despite the sausage roll maker reporting that its turnover last year was more than £2 billion.
Britain’s largest bakery chain blamed subdued consumer confidence and a “more challenging market environment” for negative high street footfall and spending in the second half of 2024.
As a result, like-for-like sales at the company-operated stores rose just 2.5 percent in the fourth quarter, half the increase in the previous three months.
Following this announcement, shares in Greggs fell 14.9 per cent to £22.36 by late afternoon, making them the biggest fallers on the FTSE 250 Index by some margin.
However, the Newcastle-based company’s strong performance in the first half of the year saw its annual turnover exceed £2 billion for the first time.
Revenues were around £200m higher than the previous year and more than 70 per cent above pre-pandemic levels.
Drop: Greggs shares tumbled on Thursday, despite the sausage roll maker reporting its turnover surpassed £2 billion last year
Greggs noted that pizza boxes and pizza bundle offers saw increased sales, while the festive bakes and new festive flatbreads were popular at Christmas.
There was also healthy demand for the over-ice drinks range, which is now available in 1,100 stores, well ahead of Greggs’ target of being available in 700 stores by the end of 2024.
The company opened a record number of 226 new outlets in 2024, bringing the total number of branches to 2,618 as of December 28.
It plans to launch another 140 to 150 net new stores this year, including 50 targeted relocations.
Roisin Currie, CEO of Greggs, said: “We continue to broaden our menu and enhance our digital capabilities, while also developing our supply chain capability to deliver on our growth strategy.
‘While lower consumer confidence continues to impact footfall and spending on the high street, our value-for-money offering and the quality of our freshly prepared food and drink position us well to weather the headwinds we face in the coming year. to expect.’
Greggs warned that higher labor costs would result in additional cost inflation in 2025, although he said Britons should benefit from higher incomes.
National insurance contributions will rise to 15 per cent on employee salaries above £5,000 from April, up from the current rate of 13.8 per cent 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 rise by 16.3 per cent to £10 per hour.
Roisin Currie said around two-thirds of Greggs staff have received a 6 per cent salary increase in early 2025.
However, Greggs has subsequently had to increase prices on some products by between 5 and 10 cents, such as its flagship sausage rolls, which now cost customers £1.30.
Russ Mould, investment director at AJ Bell, commented: ‘Some people will put up with the higher price, but others will buy less often or not at all, meaning Greggs will have to come up with a new game plan.
‘After all, it continues to open new stores and costs are rising. “Greggs is good at product innovation and it will be interesting to see if it launches a ‘cheap treat’ item where it can rely on high sales volumes to keep the tills ringing non-stop.”
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