Greggs — Better trading conditions, easing comparative

Greggs (LSE: GRG)

Last close As at 20/05/2025

GBP21.82

183.00 (9.15%)

Market capitalisation

GBP2,232m

More on this equity

Research: Consumer

Greggs — Better trading conditions, easing comparative

Greggs’ AGM trading update indicates an improvement in revenue growth in recent months versus a relatively weak start to the year, as management notes better trading conditions, while the market context remains challenging. With no changes to profit expectations for FY25, management points to profitability being skewed to H2 given the phasing of store openings and the anticipated volume recovery against easy comparatives. The prospective multiple of 15.7x looks attractive in a historical context.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Retail

20-week trading update

21 May 2025

Price 2,182.00p
Market cap £2,231m

Net cash at 31 December 2024 (excluding IFRS 16 liabilities)

£125.3m

Shares in issue

102.3m
Code GRG
Primary exchange LSE
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs 21.7 7.7 (20.7)
52-week high/low 3,162.5p 1,615.3p

Business description

Greggs is the leading UK ‘food-on-the-go’ retailer. It uses vertical integration to offer differentiated products at competitive prices. Its ambition is to grow revenue to £2.4bn by FY26.

Next events

H125 results

29 July 2025

Q325 trading update

1 October 2025

Analysts

Russell Pointon
+44 (0)20 3077 5700
Nick Hawkins
+44 (0)20 3077 5700

Greggs is a research client of Edison Investment Research Limited

Note: PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Year end Revenue (£m) PBT (£m) EPS (£) DPS (£) P/E (x) Yield (%)
12/23 1,809.6 167.7 1.24 1.02 17.6 4.7
12/24 2,014.4 189.8 1.37 0.69 15.9 3.2
12/25e 2,193.7 193.4 1.39 0.69 15.7 3.2
12/26e 2,380.5 197.1 1.42 0.71 15.4 3.2

Revenue growth picked up in recent weeks

Greggs saw an improvement in like-for-like revenue growth in company-managed stores to just under 4% in the 11 weeks to 17 May 2025, taking the cumulative total to 2.9% for the first 20 weeks of the year from 1.7% in the first nine weeks. Volumes continued to decline year-on-year but are on an improving trend, with management still anticipating volumes will improve in H225 against softer comparatives. Better weather and increased footfall on the high street were helpful in driving recent growth, as was a slight easing in the comparative from FY24. Although over a slightly different time period, the FY24 comparative for the first nine weeks eased from 8.2% to 7.4% for the first 19 weeks. From a competitive perspective, management believes Greggs has held market share over the last six months and that price competition has eased recently as its peers have put through the required price increases. Total sales growth for the first 19 weeks of FY25 of 7.4% to £784m, with slightly better growth from franchises and company-managed stores, compounds a very strong comparative of 13.8% growth.

Management expectations for FY25 are unchanged

With expectations of better volume trends in H225 intact, a greater contribution from the recent menu enhancements and no changes to net new store openings (140–150) or estimated underlying cost inflation (6% for the year), the board’s full-year profit outcome is unchanged. Profit progress versus the prior year is likely to be weighted to H2 given these dynamics. We make no changes to our estimates.

Valuation

Having performed poorly at the start of the year, the share price has shown better momentum since the start of April, including a strong positive reaction to the trading update. On our unchanged estimates, the prospective P/E of 15.7x looks attractive versus the long-term average of 18.5x since FY13.

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