Analysts are split over sausage-roll merchant Greggs PLC (LSE:GRG) following a third-quarter update that revealed weaker volumes and a slowdown in store openings.
The bakery chain said total sales rose 6.1% in the 13 weeks to 27 September, down from 7% in the first half of the year. Like-for-like company-managed shop sales increased 1.5% in Q3, compared to 2.6% in the first half.
The FTSE 250-listed group said its trading performance improved through August and September, followingthe hot weather that impacted trading in July
“The board's expectation for the full year outcome is unchanged and we remain clear on the strategic opportunities that lie ahead,” Greggs concluded.
The view among some analysts, meanwhile, was that things could've been worse for the chain.
As such, Panmure Liberum has subsequently removed its 'sell' rating, and moved to 'hold'.
The broker said forecasts for 2025 now look “increasingly underpinned” given maintained guidance, an improving cost outlook and easier Q4 comparatives. However, it cautioned that outer-year assumptions remain “ambitious”, requiring like-for-like growth to reaccelerate to 3.50% and profits to rebound to 2024 levels next year despite muted volume trends and limited progress in evening trade and delivery.
RBC, meanwhile, was even more upbeat, maintaining an 'outperform' rating, albeit with a lower price target of 2,190p, from 2,350p, compared to a prevailing price of 1,653p.
Ross Broadfoot, analyst for the Canadian bank, pointed to weak Q3 volumes of around minus 3.5% and a reduced store rollout of 120 to 140 sites next year.
He noted also that Tesco’s frozen food partnership represents potential upside, though this is not yet factored into forecasts.
Jefferies' Andrew Wade cut its target price to 2,500p from 2,650p but said he continues to anticipate a "marked" LFL improvement in Q4.
He expects little movement in consensus expectations, and left his profit estimate of £174 million intact.
"Clearly, positioning coming into the print was negative, to the extent that this reiteration was sufficient to see the shares +7% yesterday, albeit we should note that this only marks a recovery to July levels (post-warning)."