Last close As at 05/08/2026
GBP19.25
▲ −8.00 (−0.41%)
Market capitalisation
GBP1,977m
Research: Consumer
Greggs has reported that FY24 profit is in line with management’s expectation despite the more challenging environment and slowing sales growth through H224. The more challenging market means that management is more cautious about the outlook for H125 than previously. With space expansion and recovery of cost inflation, it expects to deliver profit growth in FY25 albeit lower than previously anticipated. We have reduced our FY25 profit before tax estimate by c 2%.
Greggs |
More challenging environment in H224 |
FY24 trading update |
Retail |
9 January 2025 |
Share price performance
Business description
Next events
Analyst
Greggs is a research client of Edison Investment Research Limited |
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Greggs has reported that FY24 profit is in line with management’s expectation despite the more challenging environment and slowing sales growth through H224. The more challenging market means that management is more cautious about the outlook for H125 than previously. With space expansion and recovery of cost inflation, it expects to deliver profit growth in FY25 albeit lower than previously anticipated. We have reduced our FY25 profit before tax estimate by c 2%.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
1,512.8 |
148.3 |
117.5 |
59.0 |
19.4 |
2.6 |
12/23 |
1,809.6 |
167.7 |
123.8 |
102.0 |
18.5 |
4.5 |
12/24e |
2,013.6 |
183.9 |
128.3 |
64.2 |
17.8 |
2.8 |
12/25e |
2,190.7 |
197.8 |
141.9 |
70.9 |
16.1 |
3.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Slowing growth through FY24
Greggs’ FY24 revenue of £2,014m (y-o-y growth of 11.3%) is in line with our forecast but modestly behind the consensus mean of £2,029m (source: LSEG Data & Analytics). Like-for-like sales in company-managed stores increased by 2.5% in Q424, with volume declines in the period due to a more challenging consumer environment. Combined with lower inflationary increases, growth has slowed through the year, from 7.4% in H124 and 5% in Q324. In Q4, the company fared better in non-high street stores and the less mature franchise estate, indicating greater pressure in locations where discretionary spend has been more affected by weaker consumer confidence. Despite the market weakness, Greggs has maintained its market share of visits. The period-end cash position of £125m was better than we expected as it was helped by a shift in spend on the new national distribution centre from Q424 to the first week of 2025.
FY25 profit before tax estimate reduced by c 2%
Looking to FY25, management believes the external challenges will persist through at least H1, with the expectation that sales volumes will likely decline and thus necessitate tighter cost control than previously. Greggs will continue to add 140–150 net new stores in FY25 while continuing to upgrade the estate and there is confidence that selling price inflation can cover the expected mid-single-digit cost inflation, which is mainly driven by staff and food costs. We have reduced our profit before tax estimate for FY25 to c £197.8m from £202.8m. We assume like-for-like sales growth of 3% versus 5% previously, including sales price inflation of 4%, with volume declines in H125 and modest recovery thereafter as comparatives ease.
Valuation: Attractive versus historical multiples
The recent weakness in the share price has reduced the FY25e P/E multiple to 16.1x, which is back below the long-term average from FY13–24 of 18.2x if we exclude the COVID-affected years of FY20–21. As such, we believe the valuation looks attractive in an historical context.
Exhibit 1: Financial summary
£m |
2022 |
2023 |
2024e |
2025e |
2026e |
||
Year-end December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
1,512.8 |
1,809.6 |
2,013.6 |
2,190.7 |
2,420.6 |
Cost of Sales |
(574.5) |
(710.5) |
(790.1) |
(864.4) |
(961.0) |
||
Gross Profit |
938.3 |
1,099.1 |
1,223.5 |
1,326.2 |
1,459.6 |
||
EBITDA |
|
|
269.9 |
299.2 |
343.8 |
384.1 |
412.7 |
Operating profit (before amort. and excepts.) |
|
|
154.4 |
171.7 |
191.6 |
209.0 |
227.5 |
Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
20.6 |
14.0 |
0.0 |
0.0 |
||
Operating Profit |
154.4 |
192.3 |
205.6 |
209.0 |
227.5 |
||
Net Interest |
(6.1) |
(4.0) |
(7.7) |
(11.2) |
(11.7) |
||
Profit Before Tax (norm) |
|
|
148.3 |
167.7 |
183.9 |
197.8 |
215.8 |
Profit Before Tax (FRS 3) |
|
|
148.3 |
188.3 |
197.9 |
197.8 |
215.8 |
Tax |
(28.0) |
(41.0) |
(51.4) |
(51.4) |
(56.1) |
||
Profit After Tax (norm) |
120.3 |
126.7 |
132.4 |
146.4 |
159.7 |
||
Profit After Tax (FRS 3) |
120.3 |
142.5 |
146.4 |
146.4 |
159.7 |
||
Average Number of Shares Outstanding (m) |
101.5 |
101.3 |
102.2 |
102.2 |
102.2 |
||
EPS - normalised fully diluted (p) |
|
|
117.5 |
123.8 |
128.3 |
141.9 |
154.8 |
EPS - (IFRS) (p) |
|
|
118.5 |
140.6 |
143.3 |
143.2 |
156.3 |
Dividend per share (p) |
59.0 |
102.0 |
64.2 |
70.9 |
77.4 |
||
Gross Margin (%) |
62.0 |
60.7 |
60.8 |
60.5 |
60.3 |
||
EBITDA Margin (%) |
17.8 |
16.5 |
17.1 |
17.5 |
17.0 |
||
Operating Margin (before GW and except.) (%) |
10.2 |
9.5 |
9.5 |
9.5 |
9.4 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
685.1 |
825.2 |
1,055.3 |
1,218.2 |
1,288.8 |
Intangible Assets |
13.5 |
18.3 |
24.1 |
29.3 |
30.6 |
||
Tangible Assets |
390.0 |
510.3 |
659.5 |
799.2 |
850.6 |
||
Right-of-Use Assets |
281.6 |
296.6 |
371.7 |
389.6 |
407.6 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Assets |
|
|
283.0 |
297.9 |
239.0 |
194.4 |
255.3 |
Stocks |
40.6 |
48.8 |
54.3 |
59.4 |
66.0 |
||
Debtors |
50.2 |
53.8 |
59.9 |
65.1 |
72.0 |
||
Cash |
191.6 |
195.3 |
124.9 |
69.9 |
117.4 |
||
Other |
0.6 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(244.1) |
(272.5) |
(298.8) |
(323.6) |
(354.9) |
Creditors |
(191.7) |
(216.0) |
(239.6) |
(261.7) |
(290.4) |
||
Leases |
(48.8) |
(52.5) |
(55.2) |
(57.8) |
(60.5) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(3.6) |
(4.0) |
(4.0) |
(4.0) |
(4.0) |
||
Long Term Liabilities |
|
|
(284.3) |
(326.3) |
(426.7) |
(442.0) |
(457.3) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
(252.5) |
(267.1) |
(339.5) |
(354.8) |
(370.1) |
||
Other long term liabilities |
(31.8) |
(59.2) |
(87.2) |
(87.2) |
(87.2) |
||
Net Assets |
|
|
439.7 |
524.3 |
568.8 |
647.0 |
731.9 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
272.3 |
333.0 |
374.9 |
400.8 |
432.9 |
Net Interest |
(6.1) |
(4.2) |
(7.0) |
(10.5) |
(11.0) |
||
Tax |
(13.3) |
(11.9) |
(23.4) |
(51.4) |
(56.1) |
||
Capex |
(100.8) |
(197.3) |
(250.0) |
(260.0) |
(175.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
3.1 |
3.6 |
3.6 |
3.6 |
3.6 |
||
Dividends |
(98.5) |
(60.8) |
(106.2) |
(72.5) |
(79.1) |
||
Borrowings and lease liabilities |
(52.7) |
(53.7) |
(57.3) |
(60.0) |
(62.8) |
||
Other |
(11.0) |
(5.0) |
(5.0) |
(5.0) |
(5.0) |
||
Net Cash Flow |
(7.0) |
3.7 |
(70.4) |
(55.0) |
47.5 |
||
Opening cash |
|
|
198.6 |
191.6 |
195.3 |
124.9 |
69.9 |
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing cash |
|
|
191.6 |
195.3 |
124.9 |
69.9 |
117.4 |
Closing net debt/(cash) |
|
|
(191.6) |
(195.3) |
(124.9) |
(69.9) |
(117.4) |
Closing net debt/(cash) including leases |
|
|
109.7 |
124.3 |
269.8 |
342.7 |
313.2 |
|
Source: Company accounts, Edison Investment Research |
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|
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Research: Investment Companies
BlackRock Greater Europe Investment Trust (BRGE) is one of six funds in the AIC Europe sector. Co-managers Stefan Gries and Alexandra Dangoor note that although BRGE delivered a modest below-market performance over the last 12 months, the trust’s NAV total return has retained the top spot over the last decade. Despite a somewhat weak European economic backdrop and the risk of tariffs under returning US President Donald Trump, the managers are positive about the prospects for the trust’s portfolio of high-quality growth companies. They are sticking with their long-term approach, viewing themselves as investors in businesses rather than traders in shares.