Greggs: Shares in bakery chain drop 10 per cent as it warns of further price rises

Greggs was one of more than 70 businesses that wrote to Chancellor Rachel Reeves last year to warn that changes announced in the October Budget meant price hikes were a “certainty”.

The London-listed firm added on Thursday: “Greggs has demonstrated its ability to mitigate cost inflation in recent years whilst retaining its value leadership, and we are confident we can continue to do so.”

It comes as Greggs’ fourth quarter sales grew 2.5 per cent as it pointed to a “more challenging market backdrop” in the second half of the year.

The result for the quarter ending December means Greggs made £2 billion in annual revenue for the first time ever in 2024, an 11.3 per cent rise compared to 2023.

But sales, including its famous sausage rolls and Festive Bakes over the Christmas period, came in behind growth of 5 per cent in the previous quarter.

Chief executive Roisin Currie said that lower consumer confidence “continues to impact high-street footfall and expenditure”.

But she added: “Our value-for-money offer and the quality of our freshly prepared food and drink position us well to meet the headwinds we expect to see in the year ahead, and we remain confident in the significant long-term opportunity for growth.”

Shares in the company fell by more than 10 per cent in early Thursday trading following the publication of the trading update.

Russ Mould, investment director at AJ Bell, said: “Amid weaker footfall in general across the UK high street in the last quarter of 2024, it’s no wonder that Greggs’ sales growth has slowed down. People are watching every penny and popping in for a coffee and a savoury or sweet snack is now starting to feel like a luxury rather than a transaction that requires no thought.

“Public outrage over Greggs adding another 5p to the price of a sausage roll to £1.30 shows how sensitive consumers are to price hikes. The cost of food has kept going up and we’re reaching a tipping point where people are saying enough is enough, and they’re cutting back on non-essentials.

“Greggs’ sausage rolls now cost 30 per cent more than in 2022 when you could get one for £1. Some people will stomach the higher price, but others will buy less often or not at all, which means Greggs needs to come up with a new game plan.

“The broader retail sector is going through a difficult period and it could get worse, which means investors may no longer be prepared to pay premium share ratings for companies in the sector. That’s problematic for Greggs because its shares have typically been more expensive than its peers due to its track record of success.”