Greggs Shares Slide Despite Q3 Sales Jump

Greggs (LON: GRG) shares fell more than 4% in early Tuesday trading despite the company reporting strong sales growth in its third-quarter trading update.

Total sales for the 13 weeks to 28 September 2024 increased by 10.6%. Like-for-like sales in company-managed shops rose by 5.0%. Year-to-date figures showed a 12.7% rise in total sales and a 6.5% jump in like-for-like sales.

The bakery chain credited its performance to menu innovations and the expansion of trading hours and digital channels. September was particularly strong, driven by the introduction of new items like the All-Day Breakfast Baguette, BBQ Chicken Pizza, and Pumpkin Spice Doughnut.

Despite the positive sales numbers, Greggs' stock dipped, which may be due to investor concerns about economic headwinds. Furthermore, the company's growth slowed compared to last year.

Greggs acknowledged ongoing cost pressures but said it expects cost inflation for 2024 to be at the lower end of its previous 4-5% guidance.

The British bakery chain continues to expand its retail footprint, with 86 net new shops opened year-to-date. The company plans to open 140 to 160 new locations by the end of the year. Additionally, significant investments in its supply chain are underway to support long-term growth.

Looking ahead, Greggs maintained its full-year guidance, stating: “Whilst acknowledging ongoing economic uncertainty, the Board expects the full-year outcome to be in line with its previous expectations. 

“The Board remains confident in the long-term growth opportunity for Greggs, and we are investing to support that growth.”

Despite the share price dip so far in Tuesday's session, Greggs shares are up more than 17% in 2024 and over 19% in the last 12 months.

In July, analysts at investment research firm Edison said the Greggs share price “has performed well year-to-date, leaving the valuation at a deserved premium to its UK peers given premium revenue growth and profitability.”