Picture supply: Getty Pictures
Lots of people affiliate Greggs (LSE: GRG) with tasty treats. However there’s nothing tasty about how Greggs shares have carried out this yr.
Particularly, for the reason that begin of 2025, the share worth has gone down by 42%.
So somebody who invested £1,000 in January would have seen the worth of their shareholding decline to round £580 at this level.
Greggs does pay dividends. Its yield of 4.2% is definitely enticing, for my part. However it pales into insignificance when put within the context of the share worth fall this yr.
Right here’s why the Greggs share worth has tumbled in 2025
What has been happening?
In spite of everything, Greggs has a really robust model, a confirmed enterprise mannequin and has been rising gross sales revenues.
In the latest quarter, for instance, gross sales had been up 6.1%. The primary 9 months of the yr confirmed a 6.7% gross sales enhance.
A few key causes lie behind this yr’s decline in Greggs shares, I reckon.
One was an sudden revenue warming after a sunny begin to the summer time left the chain scrambling to serve up what prospects needed.
That alarmed the Metropolis. That was not simply due to the gross sales hit, but additionally as a result of it raised issues about how effectively the corporate understands its market. Solar in summer time shouldn’t be precisely a shock, even in Britain!
One other fear is pretty weak gross sales progress. The numbers I quoted above are strong – however they’re whole gross sales. New retailer openings flatter any comparability with prior intervals.
When evaluating like for like, nevertheless, Greggs has seen gross sales develop this yr – however at a modest 2.2% within the first 9 months of the yr (in company-managed retailers). When taking the impression of inflation into consideration, that’s barely progress.
Has the autumn been overdone?
Clearly, Greggs administration has its work lower out to influence buyers that the corporate’s shares are price something like what they bought for at the beginning of the yr.
As a long-term investor, nevertheless, I’ve seen the baker’s woes as a possibility for me.
I had lengthy been eyeing the enterprise as a attainable addition to my portfolio. Its market positioning is exclusive, it has legions of loyal followers and economies of scale assist it make an honest revenue. Nonetheless, Greggs shares had been too costly for me to swallow.
This yr’s share worth fall has introduced them to what I see as a pretty worth stage – and I’ve been shopping for.
For now, I’m completely satisfied to sit down again and hopefully let the dividends pile up over time.
From a long term perspective although, I plan to hold on to my Greggs shares.
I hope that, having fallen 42% this yr, the corporate’s gross sales progress, earnings and ongoing enlargement alternatives can assist the share worth stabilise – and possibly in the end transfer even larger than earlier than!
