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After rising practically 500% in a decade, Greggs‘ (LSE:GRG) shares began crashing in direction of the tip of 2024. This coincided with new authorities plans to extend enterprise tax.
Since October 2024, when Chancellor Rachel Reeves introduced a hike in Employers’ Nationwide Insurance coverage and lowered the brink, Greggs’ shares have crashed 42%. This is able to have turned a £5,000 funding into £2,900, excluding dividends.
Not solely did the Price range enhance Greggs’ staffing prices, it arguably had a chilling impact on the UK financial system. Many companies paused hiring, pushing up unemployment, which now stands at a five-year excessive.
In 2023, Greggs’ complete and like-for-like (LFL) gross sales jumped 19.6% and 13.7% respectively. In 2025, these figures had been 6.8% and a pair of.4%, with underlying working revenue falling 4% to £188m.
Greggs beneath strain
Within the first 9 weeks of 2026, LFL development slowed even additional, to 1.6%. And Greggs can’t appear to catch a break, with the Iran struggle now anticipated to ship power, meals and gas prices larger.
And regardless of the FTSE 250 firm opening 121 internet new shops final 12 months, and planning the same quantity this 12 months, traders worry we’ve reached ‘peak Greggs’. Can the model actually hit 3,000+ places with out cannibalising present retailer gross sales? The market clearly isn’t satisfied.
On prime of this, the rise of GLP-1 medication reminiscent of Mounjaro is forcing the corporate to adapt its menu. Consequently, there are as many egg pots within the fridge in Greggs these days as there are sausage rolls behind the glass counter.
The rising use of GLP-1 medication for weight reduction is reshaping consuming habits and decreasing demand for calorie-dense meals. We analysis these traits and innovate with merchandise that assist satiety and balanced vitamin, together with gadgets which might be excessive in fibre, plant-based and protein-rich.
Greggs 2025 annual report.
Is the baker vulnerable to dropping its identification with this push in direction of more healthy meals? It’s attainable.
To summarise then, there are a large number of issues weighing on the share worth in the present day:
- Slowing development.
- Earnings beneath strain.
- Rising UK unemployment.
- Ongoing value of residing pressures.
- Peak Greggs issues.
- Declining excessive avenue footfall.
- Potential GLP-1 influence.
On account of a few of these components, Greggs is at present the UK’s third most-shorted inventory behind Ibstock and Wizz Air. So subtle traders are betting there’s extra ache to come back.
Not all doom and gloom
Regardless of the apparent challenges, Greggs nonetheless has many enticing qualities. It possesses a novel model, sturdy stability sheet, and industry-leading revenue margins (even after current strain).
Plus, there’s a well-covered ahead dividend yield of 4.2%. That’s above the FTSE 250 common.
It’s additionally value mentioning that capital expenditure peaked final 12 months, which ought to end in considerably improved money movement shifting ahead. And robotic order selecting in one in all its two new state-of-the-art distribution centres opening quickly ought to enhance effectivity.
One other factor I like is that round 20% of outlets at the moment are franchised (managed by third-party companions). These are inclined to outperform company-managed outlets, as they’re primarily centered on roadside places. And so they additionally choose up the day-to-day working prices (hire, electrical energy, and so forth).
Lastly, the shares look low cost now. Primarily based on forecasts for 2027, the forward-looking price-to-earnings ratio’s 12.5.
For affected person traders with a multi-year investing horizon, I believe the inventory’s now a shopping for alternative value serious about.
