Greggs Sales Growth Helps Shares Turn a Corner

Greggs shares jumped as much as 9% on Wednesday after the bakery chain reported faster sales growth and nudged up its full-year profit outlook.

The update also set out plans to close four manufacturing sites, which the market read as a sign that management is getting serious about costs. With the shares now pressing against the top of a base that has held for well over a year, the chart is starting to back up the improving fundamentals.

Latest Market Moves

·        Greggs shares opened around 8% higher and touched an intraday peak near 2,046p, level with July's high, before settling around 2,010p in mid-morning trade.

·        The FTSE 250 was up around 0.8% heading into Wednesday lunchtime, a fraction of Greggs' gain.

·        Hospitality peers followed Greggs higher, with Whitbread and Mitchells & Butlers both up around 2% and Domino's Pizza Group gaining around 1% in early Wednesday dealings.

·        UK second-quarter GDP growth was revised up to 0.5% from 0.4%, but household spending rose just 0.3% and the saving ratio climbed to 8.8%.

Sales Momentum Builds Through the Summer

Greggs' sales growth picked up speed in the third quarter, reversing a slowdown that weighed on the shares for much of the past two years.

Total sales rose 7.7% in the 13 weeks to 26 September, while like-for-like sales in company-managed shops climbed 3.4%, up from 2.1% in the first half. The company credited new product launches, including iced drinks and relaunched protein-focused salads, along with more settled weather in August and September.

On the back of that, Greggs now expects a "modestly improved outcome" for 2026, having previously guided for underlying pre-tax profit broadly in line with last year's £172m. The estate reached 2,796 shops after 95 openings and 38 closures so far this year, keeping it on track for 100 to 110 net openings.

Factory Closures Show a Sharper Focus on Costs

Investors also gave a thumbs up to a sweeping manufacturing overhaul, despite the upfront bill.

Greggs has launched a consultation on closing sites in Enfield, North Lakes near Penrith, Kelso and Seaham, with around 740 roles at risk over two and a half years. The plan carries one-off cash costs of about £60m but is expected to deliver roughly £20m in annual pre-tax savings across 2028 and 2029.

Chief executive Roisin Currie said the proposals are "intended to strengthen our manufacturing network, improve efficiency and ensure we remain well placed for the future." Some products will be sourced from specialist suppliers, while the shop estate is unaffected.

Cautious Consumers Still a Hurdle

The backdrop remains far from easy, with the latest data showing UK households still reluctant to spend.

Wednesday's revised figures showed household spending grew just 0.3% in the second quarter, even as real disposable income per head rose 1.0% and more of it was saved. Greggs also flagged signs of increased inflationary pressure heading into 2027, while new distribution centres in Derby and Kettering will add costs before they contribute to growth.

That makes the restructuring a medium-term story, with most of the savings not arriving until 2028. In the meantime, the shares will lean heavily on the sales momentum holding up into the winter months.

Greggs Tests the Top of Its Base

The weekly chart shows Greggs shares pressing against the ceiling that has capped them since early 2025.

After sliding from above 3,000p in late 2024, the shares spent more than a year building a base between roughly 1,400p and 1,850p. July's interim results triggered a break above the base's descending upper boundary, and September's pullback to around 1,710p held above that line and the rising 20-week moving average, now near 1,750p.

Wednesday's jump has lifted the price back to a longer-term downtrend line from the January 2025 gap lower, near 2,040p, which also lines up with July's high. A weekly close above this area would mark a meaningful break, putting the 150-week moving average near 2,160p and the May 2025 peak around 2,240p in view, with RSI at 65 leaving room before overbought territory. A rejection here would bring the 1,750p area back into focus as support.

Source: SpreadEx | Greggs, Weekly Chart