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A weak start to 2026 means Greggs (LSE:GRG) shares remains one of the FTSE 250‘s worst performers of recent times. At £15.89 per share, the bakery chain has slumped 23.8% in value over the past 12 months.
To put that into context, 101 shares bought at a total cost of £2,106 this time last year would now be worth £1,605. Dividends of roughly £70 would have taken the edge off, but investors would still be much worse off.
I’m one of those shareholders who’ve been left nursing a huge paper loss. But I think Greggs’ share price will rebound strongly from current levels. Here’s why I think it has the recipe for a stunning recovery.
Consumers strike back
For any near-term rebound to take place, there’ll most likely need to be a sharp recovery in consumer spending. The good news is that, on the latest evidence shoppers are starting to loosen the pursestrings.
Total UK retail sales rose 2.7% in the four weeks to January, according to KPMG and the British Retail Consortium (BRC). That was the fastest rate of growth since August 2025, and better than the 2.3% growth average over the previous 12 months.
This is good news for Greggs, whose growth momentum has stalled due to weaker spending. In fact, according to latest company financials the recovery is already starting to take shape. Like-for-like sales from company-managed stores increased 2.9% in Q4. By comparison, they’d risen 2.2% in the prior quarter.
Laying the foundations
The question is, can this uptick in consumer spending continue? It’s quite possible, as falling interest rates prompt people to loosen the purse strings further. The Bank of England is tipped to cut rates another two-to-three times over the course of 2026.
Yet City analysts aren’t expecting a sudden transformation in Greggs’ top line. Boosted by new store openings, they think the baker’s total sales will rise 7% this year, matching the expected growth rate for 2025.
I think this is the more realistic scenario for Greggs. In other words, a period of stabilisation before growth heats up in 2027, given the tough spot the UK economy still finds itself in.
What could drive Greggs’ sales?
Greggs is set to continue opening new stores, with another 120 planned for 2026. It’s built the logistics and manufacturing infrastructure to support up to 3,500 outlets (there were 2,739 as of 27 December). And critically, the lion’s share of these sites will be situated in more lucractive locations like travel hubs, which will be critical for future sales and earnings growth.
There’s no guarantee these steps will be successful, of course. A fresh downturn in consumer spending will impact their performance. It also has to battle extreme competitive pressures, worsened by the expansion strategies of major rivals.
However, the FTSE 250 firm’s ability to outperform the broader market gives me some confidence. And ongoing menu refreshment and drives into delivery and evening trading to boost sales add to my feeling that it’s on the right track.
Today Greggs shares look dirt cheap, trading on a forward price-to-earnings (P/E) ratio of just 12.5 times. At these levels, investors could be tempted if recent sales momentum continues.
