Greggs has warned of a “tough” year ahead as the UK bakery chain reported a further slowdown in sales growth at the start of the year, sending shares down as much as 14 per cent on Tuesday.
The maker of pasties and sausage rolls posted a 1.7 per cent rise in like-for-like sales in the first nine weeks of the year, down from 2.5 per cent in the three months to the end of December and 5 per cent in the previous quarter.
Chief executive Roisin Currie blamed the weakness on “disruptive” weather conditions in January including snow and ice, adding that while trading had improved in February, the cost of living was still weighing on consumers.
“If you look at all of the consumer confidence data points, [it is] currently low . . . It’s tough and the macro environment is hard,” Currie told the Financial Times.
The company said inflation “remains elevated, and many of our customers continue to worry about the cost of living. After years of financial anxiety, they are still facing concerns about energy prices and increased mortgage and rent costs.”
Greggs said it was also expecting cost inflation of about 6 per cent in the current financial year, due to the impact of Budget measures including higher employers’ national insurance contributions and an increase to the minimum wage.
Currie, however, forecast that a higher minimum wage would benefit consumer confidence from the middle of the year, as real wage growth led to higher disposable income for shoppers.
Greggs’ update came as industry data on Tuesday showed that annual food inflation rose to 2.1 per cent in February, marking the first time it has gone above 2 per cent since September 2024.
Greggs in December increased the national price of its traditional sausage rolls, among others, by 5p to £1.30. But Currie said there were no further price increases “on the horizon just now”.
“We have predicted this year will be a higher inflation environment,” Currie said, adding that the company would try to combat higher costs by increasing its number of shops and extending evening trading.
Greggs reported an 8.3 per cent rise in pre-tax profits in preliminary results, to £203.9mn, and posted an 11.3 per cent rise in sales to just over £2bn.