Greggs PLC (LSE:GRG) shares plunged 13% as investors took flight at the slowdown in like-for-like sales at the bakery and coffee chain and warning that there are headwinds ahead.
Broker Peel Hunt said that while weaker high street footfall over the period was cited, it believes price increases becoming less of a lever to drive sales over the year is compounding the problem.
Greggs put up prices by 4% over late December/early January, which should help underpin like-for-like sales over early 2025, said the broker, “but we have concerns that this will erode the brand's value image, given a more price competitive fast food space”.
Management has held guidance for 2024 but has not yet commented on 2025 expectations, it adds. 'Hold' with better opportunities elsewhere is Peel Hunt’s view.
Panmure Liberum said LFLs at +2.5% were below its expectations of 4% growth, with the exit run rate also worse than expected.
The valuation is ‘by no means undemanding on 19.7 times 2026 earnings’ and we note 2025 consensus expectations are for ‘mid-single-digit’ LfL company-managed sales growth (with +9% PBT growth))".
"It's hard to see any immediate catalysts for consensus upgrades on the horizon," says the broker, which also has a hold rating.
UBS remains a buyer but has trimmed its price target to 3,150p, from 3,350p, and cut its profit estimate for 2024 by 1% to £190 million and for 2025 by 6% to £203 million.
Shares fell 338p to 2,288p.