Greggs Q1 2025 earnings preview: can the bakery chain overcome early year slowdown?

Greggs' recent performance and early 2025 challenges

Greggs is set to release its first quarter (Q1) 2025 trading update on 20 May 2025, following a year of record sales but a challenging start to the new fiscal period.

​In the fiscal year ending 28 December 2024, Greggs reported total sales of £2.01 billion, marking an 11% increase from the previous year. Pre-tax profit rose by 8.3% to £203.9 million. Like-for-like sales in company-managed shops grew by 5.5% year-on-year (YoY).

​The first nine weeks of 2025 saw a deceleration in like-for-like sales growth to 1.7%, down from 2.5% in the fourth quarter (Q4) 2024. This slowdown is attributed to adverse weather conditions and ongoing economic pressures affecting consumer spending.

​This performance pattern reflects a significant moderation in growth momentum, raising questions about whether the deceleration represents a temporary blip or the beginning of more persistent challenges as consumers tighten their belts amid continued economic uncertainty.

​Analyst expectations and market outlook

​Analysts forecast Greggs' 2025 revenue to reach approximately £2.18 billion, an 8% increase over the previous year. However, earnings per share (EPS) are projected to decline by 2% to £1.35, reflecting anticipated margin pressures.

​According to LSEG Data & Analytics, 2 analysts have a ‘strong buy’ recommendation for Greggs, 7 a ‘buy’, 2 a ‘hold’, 1 a ‘sell’ and 1 a ‘strong sell’ with a median long-term upside target at 2,315.67p, 17% above its current share price (as of 19/05/2025).

Greggs LSEG Data & Analytics chart

​Greggs has a maximum TipRanks Smart Score of ’10 Outperform’ and is rated as a ‘buy’ with 5 ’buy’, 0 ‘hold’ and 1 ‘sell’ recommendation (as of 19/05/2025).

Greggs TipRanks Smart Score chart

​The contrast between revenue growth and earnings decline highlights the challenging operating environment facing the company. The disconnect stems primarily from significant cost pressures that are expected to compress margins throughout the fiscal year.

​Market sentiment toward Greggs has been rather negative, not helped by the early year slowdown, with the share price greatly underperforming by 30% the broader FTSE 250 index year-to-date. This suggests investors question the company's longer-term growth story.

​Greggs versus FTSE 250 year-to-date comparison chart

​Greggs' valuation compared to many retail peers demonstrates the market's recognition of its strong brand and growth potential. However, this positioning also means leaving limited room for disappointment in the upcoming Q1 earnings results.

​Strategic expansion and investment plans

​Greggs plans to open between 140 and 150 net new shops in 2025, focusing on non-traditional locations such as transport hubs and drive-throughs. The company also aims to enhance its supply chain capabilities with the development of a new national distribution centre.

​This ambitious expansion strategy demonstrates management's confidence in the long-term growth potential of the Greggs format despite near-term headwinds. The move into non-traditional locations represents a significant evolution of the company's store estate strategy.

​Drive-through units have proven particularly successful in initial trials, offering higher average transaction values and attracting a broader customer demographic. Updates on the performance of these newer format stores will be a key focus area in the upcoming trading statement.

​The supply chain investment, while creating short-term cost pressures, is designed to support the company's long-term expansion plans and improve operational efficiency. This strategic infrastructure development is critical for maintaining product quality and availability as the store network continues to grow.

​Cost pressures and margin challenges

​The UK government's increases in the minimum wage and employer national insurance contributions are expected to add approximately £45 million in costs for Greggs in 2025. Analysts suggest that the company may need to implement price increases or adjust employee bonuses to offset these expenses.

​These cost headwinds represent a significant challenge, equivalent to around 22% of the previous year's pre-tax profit. The company's ability to mitigate these pressures without damaging its value proposition will be crucial for maintaining profitability.

​Greggs has historically balanced modest price increases with productivity improvements to protect margins during periods of cost inflation. The upcoming trading update will likely provide insights into the effectiveness of this approach in the current environment.

​Energy costs, while moderating from the past couple of years’ peaks, remain elevated compared to historical norms and continue to impact the company's manufacturing and retail operations. Any commentary on energy cost trends and mitigation strategies will be closely scrutinised by analysts.

​Menu innovation and product development

​Greggs' menu innovation strategy has been a key driver of its success in recent years, helping to broaden its appeal beyond traditional bakery items and attract new customer segments. The trading update may provide insights into recent product launches and their performance.

​The evening daypart represents a significant growth opportunity, with extended trading hours and an enhanced hot food offering helping to drive incremental sales. Progress in building evening trade will be a key indicator of the company's ability to leverage its existing store estate more effectively.

​Vegan options continue to expand following the success of the vegan sausage roll, allowing Greggs to appeal to a broader customer base. The performance of plant-based menu items and their contribution to overall sales growth may feature in the update.

​Seasonal offerings and limited-time promotions have proven effective in driving footfall and average transaction values. The impact of recent promotional activities on mitigating the early-year slowdown will be of particular interest to investors.

​Digital transformation and customer loyalty

​Greggs' digital transformation journey continues to evolve, with the Greggs App and loyalty scheme playing an increasingly important role in customer engagement and data-driven decision making.

​The Greggs App has seen significant adoption, enabling convenient ordering, loyalty rewards, and personalised offers. Updates on app user growth and engagement metrics will provide insights into the company's digital progress.

​Click and collect functionality has expanded across the store estate, providing a convenient option for customers while helping to reduce in-store queuing times. The contribution of digital orders to overall sales will be a key performance indicator.

​Customer loyalty initiatives, including the Greggs Rewards programme, aim to increase visit frequency and average spend through targeted promotions and rewards. Any updates on loyalty programme performance and its effectiveness in sustaining customer engagement during challenging economic conditions will be noteworthy.

​Technical analysis of the Greggs share price

​The Greggs share price, even though it has risen by around 18% from its early April low to its current level, is still trading down 30% year-to-date, compared to the FTSE 250 which is flat.

​The sharp fall in January still dominates the weekly candlestick chart with the January low to February highs at 2,026p-to-2,198p creating a significant resistance area. This capped the upside last week, despite it turning out to be a strong bullish advance.

​Greggs weekly candlestick chart  

​For recently bullish momentum to be maintained, not only does an advance above last week’s high at 2,052p need to occur but the key 2,026p-to-2,198p resistance zone and the October 2023 low at 2,244p to be overcome. Only then would a medium-to-long-term bullish trend reversal gain traction.

​Having said that, the fact that a rise above the 12 March high at 1,932p has been witnessed, should encourage the bulls.

​Greggs daily candlestick chart 

​As long as no bearish reversal takes the Greggs share price to below its early May low at 1,776p, the April-to-May uptrend is deemed to stay intact.

​Trading Greggs shares ahead of the update

​For investors considering positions in Greggs ahead of the Q1 trading update, several approaches are available through IG's trading and investment platforms.

1. ​Research Greggs' recent performance, competitive positioning, and growth strategy to inform your trading decision.
2. ​Consider how consumer spending trends and cost pressures might impact the company's near-term prospects.
3. ​Open an account with IG by visiting our website and completing the application process.
4. ​Search for 'Greggs' or its ticker 'GRG' on our trading platform or app.
5. ​Place your trade, ensuring you have appropriate risk management measures in place given the potential volatility around trading updates.

​Spread betting and CFD trading offer ways to potentially profit from both rising and falling share prices. With leveraged products like these, you can gain exposure to Greggs with a smaller initial outlay, though it's important to remember that leverage magnifies both potential profits and losses.

​For those with a longer-term view who believe in Greggs' growth story despite near-term challenges, share dealing provides a more straightforward investment approach. This allows you to build a position in a company that has demonstrated strong brand appeal and resilience through various economic cycles.

​Despite the early-year slowdown, Greggs' management remains confident in the company's growth prospects, citing strong brand loyalty and strategic investments. The upcoming Q1 trading update will provide further insights into the company's performance and its ability to navigate the current economic landscape, potentially creating significant share price movement depending on how the results compare to market expectations.​