FTSE 250 profit warnings: Greggs and Bytes Technology plunge
The UK mid-cap index is in positive territory for 2025, but it’s not been a great year for all companies. City writer Graeme Evans explains what just happened to this unlucky lot.
2nd July 2025 13:48
by Graeme Evans from interactive investor
Greggs (LSE:GRG) shares were today 40% below their 2025 starting point and Bytes Technology Group Ordinary Shares (LSE:BYIT) at a two-year low in a session when Softcat (LSE:SCT) and Computacenter (LSE:CCC) also suffered in the FTSE 250 index.
The baker’s guidance that earnings will be light of 2024’s level amid the impact of June’s hotter weather on sales and product mix left Greggs shares back where they were in late 2020.
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The slide as far as 1,646p followed an earlier trading setback in January, when subdued levels of high street footfall were blamed for disappointing fourth quarter sales figures.
One City firm noted that Greggs’ forward earnings valuation multiple was the bottom of its last 10 years’ range despite a strong record of cash generation and longer-term growth potential.
Greggs said today it remained on track to achieve 140 to 150 net openings for the full year, having expanded to 2,649 shops by the end of June. This compares with 2,078 in 2020.
The outlook for cost inflation is also unchanged, with planned mitigation measures expected to enhance the second half performance. The chain also faces softer sales comparisons, having seen June’s like-for-like growth slow to an estimated 1% from the 2.9% reported on 20 May.
Analysts at City bank Jefferies, which had a price target of 2,650p prior to today’s update, reiterated their support for the stock today.
They said: “The recent good weather has undoubtedly been a factor in sector trading, and Greggs is one for which extreme heat is unfavourable (think sausage rolls and steak bakes).
“While obviously disappointing that full-year expectations are nudging back, we do not see this as a reflection on the underlying health of the business and it does not change our view on the fundamentals.”
In contrast, Shore Capital has a Hold recommendation as it expects Greggs shares to tread water. The broker warned that a combination of weak trading momentum and higher infrastructure costs will mean no earnings per share growth over the next three years.
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The warning by Bytes Technology that it had experienced some deferral of customer buying decisions impacted stocks across the software and IT services.
Softcat, for example, traded back where it was in early April even though the IT infrastructure technology and services specialist upgraded profit guidance on 28 May.
Computacenter, which reiterated guidance in its most recent update on 1 May, fell back to a level last seen in mid-April.
Bytes, which helps organisations including the NHS and HMRC to integrate AI and to transform operations using Microsoft Copilot and other tools, is 12% lower year-to-date at 370.6p.
The group, which serves about 6,000 customers in the corporate and public sectors, expects gross profit to be at a similar level to last year and operating profit marginally lower. This should be followed by more normalised growth in both metrics in the second half.
Chief executive Sam Mudd said a more challenging macro environment had been compounded by the near-term effect of changes in the operating model of its corporate sales team.
She said: “While this has affected trading, our value proposition remains strong.
“We're seeing continued engagement, a healthy pipeline and remain confident that as these sales team changes bed in, we will be a stronger business, better aligned to meeting our customer needs and drive sustainable growth."
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Peel Hunt believes the industry is seeing a pause rather than reduction in customer IT budgets and that companies will continue to invest in AI, cloud and cyber security to lower costs and risk.
The broker, which reiterated a Buy rating on Bytes with a price target of 638p, said: “While changes to the sales team added friction, we believe this is transient and trust management to return Bytes to 10%-plus operating profit growth.”
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