Greggs plc (LON:GRG), the beloved UK food-on-the-go retailer, has proven its ability to weather tough market conditions, delivering solid results for FY24 despite a challenging consumer environment. According to Edison Investment Research, led by analyst Russell Pointon, the company has maintained its momentum and demonstrated a clear path forward for sustained growth.
In FY24, Greggs achieved revenue of £2,014 million, marking a year-on-year growth of 11.3%. While this was slightly below the consensus forecast of £2,029 million, Greggs maintained its market share, showcasing the strength of its brand and strategic initiatives. Notably, the company performed better in non-high street locations and newer franchise estates, which are less susceptible to pressures on discretionary spending.
Reflecting on the company’s financial position, Russell Pointon stated: “The period-end cash position of £125m was better than we expected as it was helped by a shift in spend on the new national distribution centre from Q424 to the first week of 2025.” This strong liquidity provides a robust foundation as Greggs looks to navigate FY25 with cautious optimism.
A Vision for Growth in FY25
While Greggs anticipates ongoing external challenges in the first half of 2025, its forward-looking strategy includes the addition of 140–150 new stores and further upgrades to its existing estate. This aligns with its ambition to reach £2.4 billion in revenue by FY26. Furthermore, management is confident that selling price inflation will offset mid-single-digit cost inflation, driven primarily by staff and food costs.
However, Edison Investment Research has adjusted its FY25 profit before tax estimate to £197.8 million from the previous £202.8 million, reflecting expected volume declines in the first half. Despite this revision, Pointon highlighted the company’s strategic resilience, saying, “Greggs will continue to add net new stores while maintaining tight cost control. This positions the company well for recovery as the market stabilises.”
An Attractive Valuation Opportunity
For investors, Greggs presents a compelling valuation case. The FY25 P/E ratio of 16.1x is below the historical average of 18.2x, offering an attractive entry point. This comes as Greggs remains steadfast in its long-term strategy of growth through vertical integration and product differentiation.
Final Thoughts
Greggs continues to exhibit resilience, adaptability, and strategic clarity in an uncertain economic landscape. With a robust store expansion plan, effective cost management, and a clear focus on its long-term goals, the company is well-placed to capture future opportunities. As Russell Pointon aptly summarised, “Greggs’ proactive approach ensures it remains a leading player in the UK food-on-the-go market.”
