Greggs — Sales growth slows as the country bakes

Greggs’ H125 trading update showed sales growth slowed in June as high temperatures affected footfall and purchasing patterns. Although the company benefits from sales of cold drinks, including its own over-ice drinks that are in only part of the estate and third-party drinks, there is both an overall volume and a gross margin impact versus other products that have sold less well. Therefore, following challenging weather conditions in January and June and with hotter weather forecast in July, management anticipates FY25 operating profit could be modestly lower than reported in FY24. We reduce our FY25 profit estimate by c 10%.