Greggs Warns of Ongoing Challenges for Shoppers Following Profit Decline
Greggs, the prominent high street bakery chain, has issued a stark warning that conditions remain difficult for customers after revealing a significant slump in profits over the past year. The company, headquartered in Newcastle, reported a 17.9% drop in statutory pre-tax profits to £167.4 million for the year ending December 27, compared to the previous year.
CEO Highlights Persistent Consumer Caution
Chief Executive Roisin Currie emphasised that the backdrop is still tough for consumers, pointing to low consumer confidence and strained disposable income. She stated, "We have come into 2026 planning for another challenging year. When you look at consumer confidence and disposable income, you can see that the backdrop is still tough out there." This sentiment reflects the broader pressures faced by shoppers, including the rising cost-of-living, higher tax and labour costs, and increased use of weight-loss treatments.
Factors Behind the Profit Drop
The decline in profits was attributed to several key factors. Greggs cited a challenging market environment and a spell of particularly hot weather that reduced high street footfall. Despite these hurdles, the company demonstrated resilience, with total sales growing by 6.8% to £2.15 billion over the year. This growth was supported by a robust store opening programme, which saw 121 net new stores in 2025, expanding the estate to 2,739 locations.
Optimism Amid Easing Inflation
Ms Currie offered a cautiously optimistic outlook, noting that easing inflationary pressures could provide some relief. She explained, "Looking into 2026, easing inflationary pressures should provide some support to consumer spending, and demand for convenient food-on-the-go continues to underpin the market." The company has seen cost inflation slow from nearly 6% last year to around 3% this year, which may help boost consumer spending in the coming months.
Sales Performance and Future Plans
In the first nine weeks of 2026, like-for-like sales across managed shops increased by 1.6%, with total sales up 6.3% due to ongoing store openings. Greggs is targeting approximately 120 further store openings this year, with long-term ambitions to grow to significantly more than 3,000 UK shops. The expansion of its delivery business and increased evening trade have also contributed to sales growth, highlighting the company's adaptive strategies in a tough retail landscape.
Overall, while Greggs faces ongoing challenges from cautious shoppers and external factors, the firm remains focused on growth and resilience, banking on easing inflation to spur consumer demand in the year ahead.
