Investing.com – Greggs (LON:) The company’s shares fell more than 10% on Thursday after a trading update that showed slower like-for-like sales growth and a cautious outlook for the future.
The company reported comparable sales growth of 2.5% in the fourth quarter, a notable slowdown from growth of 5% in the third quarter and 7.4% in the first half.
The weaker numbers appear to reflect broader consumer concerns rather than a temporary dip.
Jefferies analysts noted that the softer trading environment in July and August, which was previously seen as a potential setback, now appears to represent a more sustainable trend.
“The decline in consumer confidence has impacted footfall on the High Street, as well as industry-wide footfall and spending,” the company said in a statement to the stock exchange.
However, the company has maintained its market share in terms of customer visits, suggesting the problems are industry-wide rather than specific to Greggs.
Despite the slowdown in growth, the UK bakery and food-on-the-go chain remains optimistic that it will meet full-year expectations by 2024.
The company said its expansion strategy continues at a rapid pace, with plans to open 140-150 new stores by the end of the year.
This includes a record 226 new openings, highlighting the brand’s long-term ambitions.
“In 2025, employment costs will lead to further headline cost inflation, although rising wages should support consumers,” it added.
Jefferies analysts expressed concern that softer fourth-quarter results could carry over into the first half of 2025.
They suggested that consensus earnings growth estimates for 2025 may have to be revised to around 5% or lower, reflecting challenges from lower consumer spending.
“However, the group maintained market share, suggesting this is a market-wide slowdown rather than a problem specific to Greggs. While economic data points to better-than-expected consumer health in FY25, confidence continues to decline,” RBC Capital Markets analysts said in a note.