Greggs Reports Record £2 Billion Sales and Profit Growth in 2024
Why we think this is neutral
Greggs has delivered a strong financial performance in 2024, with record sales exceeding £2 billion and profit growth. However, this positive performance is balanced against some challenging factors. The company faced a tougher market context in the second half of the year, with like-for-like sales growth slowing compared to the first half. Additionally, Greggs is anticipating significant cost pressures in 2025, particularly from employment costs. While the company remains confident in its ability to manage these headwinds, they do present a risk to future profitability. The food-to-go market remains challenging, and there are ongoing economic uncertainties affecting consumer behavior. On the positive side, Greggs continues to expand its shop estate and invest in its supply chain capacity, which should support future growth. The company's strong cash position and available credit facilities provide financial stability. Overall, while Greggs has performed well in 2024, the outlook presents a mix of opportunities and challenges that warrant a cautious but optimistic view.
Key Points
- Record sales of £2,014 million, up 11.3% from 2023
- Underlying pre-tax profit increased 13.2% to £189.8 million
- Like-for-like sales in company-managed shops up 5.5% year-on-year
- Opened 226 new shops, with 145 net openings in 2024
- Strong financial position with £125.3 million net cash
- Targeting 140 to 150 net new shop openings in 2025
- Anticipating around 6% input cost inflation in 2025
- Investing in supply chain capacity to support growth up to 3,500 shops
- Challenging food-to-go market conditions noted
- Confident in ability to manage inflationary headwinds
Summary
Greggs plc reported strong financial results for 2024, with total sales growing 11.3% to £2,014 million and underlying pre-tax profit increasing 13.2% to £189.8 million. The company saw like-for-like sales growth of 5.5% in company-managed shops, although growth slowed in the second half of the year. Greggs continued its expansion, opening a record 226 new shops and ending the year with 2,618 shops. The company maintains a strong financial position with £125.3 million in net cash. Looking ahead, Greggs anticipates challenges from cost inflation, particularly in employment costs, but remains confident in its ability to manage these pressures. The company is targeting 140 to 150 net new shop openings in 2025 and continues to invest in its supply chain capacity to support future growth. Despite the positive results, Greggs acknowledges the ongoing challenges in the food-to-go market and broader economic uncertainties. Broker targets suggest a positive outlook, with price targets ranging from 3,180p to 3,600p, significantly above the current share price of 2,082p.