Greggs Shares Plummet as Sales Growth Slows Amid Tough Trading Conditions

Greggs PLC, the popular UK bakery chain, has seen its shares drop by over 8% following a slowdown in sales growth amid challenging trading conditions. The company, known for its sausage rolls and other baked goods, reported a disappointing 2.5% sales growth in the Christmas quarter, sending its shares tumbling in January 2025. This article explores the factors contributing to Greggs' sales slowdown and assesses whether the recent share price drop presents an opportunity for long-term investors.



Greggs' sales growth has been slowing down, with like-for-like sales in the first nine weeks of 2025 up just 1.7%. The company attributed this slowdown to weather conditions in January, but it is essential to consider other factors contributing to this trend and potential solutions to address these challenges.

1. Inflationary pressures: Greggs is not immune to inflationary pressures, which can increase costs and potentially lead to price hikes. In 2022, Greggs absorbed some costs but also passed some on to consumers through price hikes. To manage inflationary headwinds, Greggs can focus on cost optimization, efficient supply chain management, and maintaining competitive pricing to attract price-sensitive customers.
2. Market saturation and competition: Greggs has been expanding its store portfolio aggressively, with a target of opening 140 to 150 net new stores in 2025. However, this rapid expansion may lead to market saturation and increased competition in certain areas. To address this, Greggs can focus on:
* Differentiating its offerings by introducing new products and innovative menu items.
* Targeting new customer segments, such as the evening food-to-go market, where Greggs sees a clear opportunity for growth.
* Improving operational efficiency and customer experience to maintain a competitive edge.
3. Changing consumer preferences: Consumer preferences are evolving, with an increased focus on health, wellness, and sustainability. Greggs can address this by:
* Expanding its plant-based food offerings, as they have been contributing significantly to the range over time.
* Introducing healthier and more sustainable menu items to cater to changing consumer preferences.
* Enhancing its loyalty program and digital platforms to better understand and respond to customer preferences.
4. Economic uncertainty: The current economic environment is characterized by uncertainty, which can impact consumer spending on discretionary items like food-on-the-go. Greggs can mitigate this risk by:
* Maintaining a strong value-for-money proposition to attract price-sensitive customers.
* Diversifying its revenue streams, such as through partnerships and collaborations (e.g., the Primark collaboration in 2022).
* Continuing to invest in its supply chain and technology to improve operational efficiency and reduce costs.

By addressing these factors and implementing targeted strategies, Greggs can work towards regaining momentum and accelerating its sales growth. The recent share price drop could present an opportunity for long-term investors, given Greggs' strong financial position and growth prospects. However, it is crucial for the company to manage inflationary headwinds and adapt to changing consumer preferences to maintain its competitive edge in the food-on-the-go market.

In conclusion, Greggs' recent sales slowdown and share price drop are concerning, but the company has the potential to bounce back by addressing the underlying challenges and implementing strategic initiatives. Long-term investors should monitor Greggs' progress and consider the opportunities and risks associated with investing in the company at this stage.