Greggs — Looking through challenging markets

Greggs’ H125 results reflect disruption to revenue growth from unusual weather as well as the phasing of cost pressures. The presentation focused on why weak trading is not specific to Greggs. Directionally, revenue growth is consistent with market trends (ie improving momentum) through May 2025 until the June heatwave reversed the trend. There was no specific negative effect on volumes following the most recent price increase, and management quantified cannibalisation of existing stores within a catchment area from the addition of new stores is minimal. As a result, it believes the relatively weak trading reflects the wider weak consumer confidence as well as pressures on disposable income for some consumers, beyond the one-off weather effects. The announcements of numerous new initiatives, including trials of smaller ‘bitesize Greggs’ stores in appropriate locations, extending the frozen ‘Bake at Home’ range into Tesco and trialling of kiosks in stores, show management continues to seek new growth initiatives and efficiencies.