- Fourth quarter of 2025 shows improved momentum in like-for-like sales
- Analysts’ forecasts already more conservative than management guidance for last year
- However, store openings plan for 2026 looks to be below estimates
- No profit recovery expected this year
- Shares slide and remain heavily shorted
“Greggs’ fourth-quarter trading update could have been worse, because like-for-like sales growth improved and boss Roisin Currie was able to stick to her prior guidance for profits, but the share price has gone down anyway,” says AJ Bell investment director Russ Mould.
“Analysts’ forecasts for 2025 are already implying a lower outcome for operating profit than management’s steer of a ‘small decline’, and the plan to open 120 new shops on a net basis in 2026, less than expected, may prompt reductions to estimates for the year ahead.
“Like-for-like sales growth on the fourth quarter of 2025 came to 2.9% year-on-year, the best rate of increase in any three-month period last year. Even if that was helped by a softer base for comparison, this improvement in momentum may help to allay longstanding fears over whether Greggs’ menus are now too complex and also ease wider concerns over the state of consumer confidence, high street footfall and the UK economy.
Source: Company accounts
“Analysts had already moved to take a more pessimistic stance than the company when it came to 2025’s profits. The consensus analysts’ forecast of £174 million compares to £195 million in 2024 and that represents a far greater drop than the one implied by boss Roisin Currie in the third-quarter update, which offered further downgrades on top of the one issued alongside summer’s profit warning.
Source: Company accounts, Marketscreener, analysts’ consensus forecasts. *Excludes exceptional items.
“In this respect, there may not be much needed to cut 2025’s estimates, but forecasts for 2026 are at risk. Greggs is now targeting 120 net new store openings for the coming 12 months, whereas analysts had been expecting around 150.
“Roisin Currie is now forecasting flat profits for 2026. Ahead of Thursday’s update, analysts had been expecting a small improvement, to £183 million from their previous expected out-turn of £125 million for 2025.
Source: Company accounts
“This slower pace of expansion may only play to the investment thesis of those who are shorting the stock, namely that the company has expanded too far, too fast.
“According to data from Short Tracker, Greggs is the most heavily shorted stock in the UK market, despite its net cash balance sheet, strong brand and growth track record. Even management’s reassurance that capital expenditure peaked in 2025, and thus cash flow should improve in 2026, thanks to the completion of a new national distribution centre and the slower store roll-out, does not seem to be enough to win over the sceptics.
“The question now, therefore, may be one of how low the share price and the stock’s valuation have to go before the bears close out their short positions.
“If analysts’ forecasts for 2025 are correct, and 2026 does indeed come in flat against those, then Greggs will report earnings per share (EPS) of around 125p. As a result, the current share price puts the stock on around 13 times earnings for 2026, a rating that is broadly in line with the wider UK stock market.
“Greggs’ premium rating has therefore been eroded, as it has failed to deliver the consistent profit growth expected of it. It will be interesting to see if the bears wait for the stock to go to a discount rating before the close out, something which is possible unless Greggs manages to end the run of profit downgrades and conjures up some fresh forecast upgrades.”
