UPDATE: Greggs’ shares have plunged a staggering 43.5% this year, raising urgent questions about the future of the beloved UK bakery chain. As of now, a £5,000 investment has dwindled to just £2,822, prompting investors to reconsider their positions in light of the company’s ongoing challenges.
The stock’s dramatic decline reflects a mix of slowing sales and escalating operational costs. Greggs, which employs over 32,000 people across the UK, faces mounting pressures from both rising wage costs and persistent inflation. Recent government announcements, including a 4.1% increase in the National Living Wage, further complicate the financial landscape for the company.
As the bakery struggles with a significant drop in pre-tax profits—falling by double digits—investors are left wondering whether this represents a buying opportunity or a deeper financial pitfall. While Greggs is currently trading at a low price-to-earnings ratio of just 11.4, the company’s ability to rebound remains uncertain.
In addition to wage pressures, Greggs has been grappling with inflation driving up the costs of key raw ingredients. Adverse weather conditions earlier in the year also contributed to reduced foot traffic in stores. However, there is a glimmer of hope; recent reports indicate a recovery in weather conditions, along with a 6.1% increase in sales during the third quarter, signaling potential improvement despite the overall decline.
Attention now shifts to the company’s upcoming trading update expected in early January. Investors will be keen to see if revenue growth is re-accelerating and whether management can effectively manage cost inflation through efficiency gains or price adjustments. A positive outcome could potentially trigger a much-needed share price rally.
Nevertheless, challenges remain. High wage inflation is anticipated in the coming year, and many UK households are still under significant financial pressure. This raises concerns that any price hikes on Greggs’ products could backfire, impacting sales volumes.
The company is currently piloting a programme for self-service kiosks, which could help mitigate the impact of rising wages by allowing for reduced staffing levels. Success in this area could be crucial as Greggs navigates its financial hurdles in 2026.
For now, uncertainty looms over Greggs, making it difficult to determine if the current share price represents a genuine bargain or if further declines are on the horizon. As investors weigh their options, the bakery’s future remains a hot topic in financial circles.
Stay tuned for further updates on this developing story, and consider exploring other investment opportunities that may offer better prospects in this volatile market.
The post Greggs Shares Plunge 43.5% in 2025: Is This a Buying Opportunity? first appeared on The Motley Fool UK.
