Greggs warns conditions ‘still tough’ for shoppers after slump in profits

Dan Coatsworth, head of markets at AJ Bell, said: “Greggs’ profit has deflated like an undercooked cake.

“The new financial year has also got off to a slow start, leaving investors wondering if the once-loved food seller has gone off the boil.

“The company is optimistic that easing inflationary pressures will translate into greater consumer spending and that the public will choose to buy more of its sweet and savoury goods.

“The spanner in the works is what’s happening in the Middle East and how that has caused energy prices to soar.

“There is a real threat of a new inflation spike and that could stop shoppers in their tracks.

“If it costs more to fill up the car with fuel and to heat the home, cutting back on sausage rolls and donuts to save money is an easy decision to make.

“Greggs continues to spruce up its menu but there is a nagging feeling its proposition is becoming stale.

“Consumer tastes constantly evolve and competition is plentiful.

“Eating habits are also changing amid greater interest in living a healthier and fitter lifestyle, as well as rapid take-up of weight-loss drugs which curbs people’s appetites.

“Greggs might expect to keep ticking along, but the big unknown is the pace of future growth.

“Greggs’ store rollout plan suggests it expects the nation to be feasting on its goods all day long, but the past few years’ worth of trading and financial figures suggest that’s no longer a given.”