ii view: Greggs on a roll amid sales boost

A Greggs’ advert in London. Photo: Mike Kemp/In Pictures via Getty Images.

First 19 weeks of the financial year to 9 May

• Total sales up 7.5% to £800 million
• Like-for-like sales up 2.5%
• Like-for-like sales for the latter 10-week period up 3.3%

Guidance:

• Continues to expect full-year 2026 profits similar to 2025

ii round-up:

Greggs (LSE:GRG) is a UK food-on-the-go maker, distributor and retailer of items including bakery products, sandwiches and drinks.

Store numbers totalled 2,759 as of mid-May with most outlets company managed and just over a fifth run on a franchised basis.

For a round-up of this latest trading update announced on 12 May, please click here.

ii view:

Started in 1939 and headquartered in Newcastle, Greggs today employs more than 30,000 people. The FTSE 250 company began a transformation from bakery to food-on-the-go retailer back in 2013 with its outlets now including drive-thru stores. Competition today includes Marks & Spencer Group (LSE:MKS), McDonald's Corp (NYSE:MCD) and WH Smith (LSE:SMWH). Greggs’ strategy includes an expansion of digital-related sales such as click & collect and delivery via Just Eat and Uber Eats.

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For investors, group estimates for broadly unchanged profits during 2026 now sit against a backdrop of elevated energy prices in the wake of the war in the Middle East and potentially higher group energy costs going forward. Existing cost headwinds have included raised employee-related taxes, as well as ongoing investment costs in expanding and improving the group’s supply chain. The rise of weight-loss drugs potentially reducing some consumer demand is not to be forgotten, while extremes of weather have previously impacted customer demand.

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On the upside, ongoing product innovation has aided customer demand with like-for-like sales improving over the most recent 10-week period. Management growth focuses include an eventual 3,000 or more stores, increased delivery sales and selling group products at other retailers such as Tesco. The opening of an outlet at Tenerife airport could lead to further overseas stores going forward, while management’s focus on reducing costs saw £13 million cut during 2025, £4 million ahead of target.

On balance, and while risks remain, an estimated future dividend yield of around 4% will likely keep existing fans of this value-orientated retailer long-term patient.

Positives:

• Value product offering
• Several growth initiatives

Negatives:

• Uncertainty economic outlook
• Lacks geographical diversity

The average rating of stock market analysts:

Strong hold