Greggs, the UK high street bakery chain, reported a 17.9% decline in pre-tax profits to £167.4 million for the year ending December 27th, despite a 6.8% increase in total sales to £2.15 billion. The results reach as the company faces scrutiny over whether it has reached “peak Greggs,” a concern voiced amid challenging economic conditions and shifting consumer habits.
The profit slump, detailed in the company’s annual report, reflects a slowdown in sales growth at the start of 2026. Like-for-like sales in established stores rose 1.6% over the first nine weeks of the new year, while total sales increased 6.3% boosted by new store openings. This represents a deceleration compared to the previous year’s performance.
Chief Executive Roisin Currie attributed the downturn to a combination of factors, including persistent cost-of-living pressures impacting consumer spending and the increasing popularity of weight-loss drugs. “We locate it challenging and the consumer finds it challenging,” Currie stated, highlighting the ongoing strain on household disposable income due to high energy and food costs. According to Currie, easing inflation has not yet translated into increased consumer spending.
Despite the challenging environment, Greggs remains optimistic about the long-term outlook. The company is protected from potential energy price increases stemming from Middle East conflict until 2027, having secured a fixed price for its energy supply. Greggs anticipates inflation of around 3% in the current year, a decrease from the previous year, and will benefit from adjustments to its business rates bill following the autumn budget. However, rising wage costs due to increases in the legal minimum wage are expected to offset some of these gains.
The company demonstrated resilience by awarding a £20 million profit-share bonus to its 33,000+ employees who have been with the business for more than six months, averaging £800 per employee on a 30-hour contract. This figure is consistent with the previous year’s payout.
The unusually warm weather experienced during the reporting period also negatively impacted footfall and consumer behavior, according to the company. Greggs expanded its retail footprint with 121 net new store openings in 2025, bringing the total to 2,739 locations. The company plans to open approximately 120 more stores in 2026, with ambitions to exceed 3,000 UK shops in the longer term.
Analysts offered differing perspectives on Greggs’ future. Darren Shirley of Shore Capital noted the slowdown in trading, stating there was “little to shout about.” However, Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, emphasized Greggs’ proactive efforts to adapt to changing customer preferences, including menu adjustments and extended evening opening hours, which are proving to be the fastest-growing part of the business.
Sales growth has also been supported by an expansion of delivery services and extended store hours. The company has not yet commented on the specific impact of weight-loss drugs on sales figures beyond Currie’s initial remarks.
