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On 2 July, the Greggs (LSE:GRG) share price crashed 15% as investors took a dislike to the pie and sausage roll maker’s latest trading update. Since then, it’s been in slow decline. At the time of writing (1 September), the stock’s changing hands for 20% less than at the start of July. Its market cap is now half what it was in August 2024.
To assess the investment case, I’m going to consider how the baker’s performing against the four key drivers of growth that it’s identified for itself.
1. Growing the estate
Greggs is certainly not hanging about when it comes to opening new shops. After all, more sites equals higher revenue.
On 2 January 2021, it operated 2,078 stores. By 28 June 2025, this had increased by 27% to 2,649. The group has plans to grow this to “significantly more” than 3,000. However, a timescale has not been specified.
2. Extended trading
With so many stores up and down the country, I suspect the best locations already have a Greggs.
However, by opening new premises in places that permit evening trading, it’s possible to attract customers who might not otherwise be able to enjoy its food and drink offering.
3. Digital channels
Greggs makes its products available via Just East and Uber Eats.
During the six months ended 30 June 2025 (H1 25), digital sales accounted for 6.8% of company-managed shop revenue. This was marginally higher than for the same period in 2024 (6.7%).
4. Broadening customer appeal and driving loyalty
Via the group’s app and through social media, the baker intends to widen its appeal. And it seems to be doing quite well here. It’s currently number 8 in the Food and Drink category of Apple’s free app store.
So what’s the problem?
But a growing top line — total sales were up 7% in H1 25 — isn’t translating into improved earnings.
Operating profit was 7.1% lower and pre-tax earnings fell 14.3% compared to H1 24. Some of this was due to the timing of costs but “challenging” market conditions and weather disruption were also to blame. Operating profit in 2025 is now expected to be “modestly below” that achieved in 2024.
And although like-for-like sales increased 2.6% during the quarter, the rate of growth was slower compared to the same quarter in 2024. For Greggs, that’s a problem. Momentum is so important in helping maintain positive investor sentiment. When growth slows, some will look elsewhere. Also, with 100% exposure to the UK, investors might be worried that it’s particularly sensitive to a domestic slowdown.
However, one advantage of the falling share price is that the stock’s yield has increased. Based on amounts paid over the past 12 months, it’s now up to 4.3%. Of course, there are no guarantees when it comes to payouts.
But if Greggs can pick up its rate of sales growth once more then I’m sure its share price will respond positively. The stock’s currently trading on 12.7 times its expected earnings for 2025. This is slightly below its three-year average and could imply that the recent sell-off has been overdone.
In my opinion, the group has a strong brand and an impressive growth story. Most importantly, its stores always look busy to me. On balance, I think it’s one to consider.
