Greggs, the beloved high street bakery chain, has reported a significant drop in profits amid challenging market conditions, but its CEO, Roisin Currie, remains optimistic about consumer spending prospects for the year ahead. The Newcastle-based firm revealed that while sales growth has slowed, easing inflation may provide some relief.
Profit Slump Amidst Economic Pressures
In its latest financial results, Greggs reported a pre-tax profit decline of 17.9%, totalling £167.4 million for the year ending December 27. This downturn can be attributed to a combination of factors, including a challenging economic environment, increased costs associated with living expenses, and a particularly hot summer that affected foot traffic in its shops.
Currie stated, “We have come into 2026 planning for another challenging year,” highlighting ongoing concerns about consumer confidence and disposable income. The company has seen cost inflation decrease from nearly 6% last year to about 3% this year, yet the cautious sentiment among shoppers persists.
Sales Growth Supported by Strategic Expansion
Despite the profit dip, Greggs has managed to grow its total sales by 6.8%, reaching £2.15 billion, thanks in part to an ambitious store opening strategy. The bakery chain opened 121 new locations last year, bringing its total to 2,739 shops across the UK. Looking forward, the company plans to open around 120 additional stores, with long-term aspirations to exceed 3,000 outlets.
Currie noted that the expansion of its delivery service and a rise in evening sales have also contributed to the sales growth. “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,” she added.
Resilience Amidst Challenges
Greggs has demonstrated resilience in the face of various challenges, including rising costs and changing consumer behaviour influenced by the popularity of weight-loss treatments. The company has focused on adapting to these trends, and while it acknowledges the tough landscape, it remains committed to its growth strategy.
In the first nine weeks of 2026, like-for-like sales in managed shops increased by 1.6%, with total sales up 6.3%, buoyed by the ongoing expansion efforts. This growth indicates that while shoppers may be cautious, there remains a strong demand for Greggs’ products.
Why it Matters
The performance of Greggs is indicative of broader economic trends affecting retailers across the UK. As inflationary pressures begin to ease, the potential for increased consumer spending could signal a turning point for businesses struggling under the weight of high costs. Greggs’ ability to adapt and expand in a challenging market could provide valuable insights for other retailers aiming to navigate similar obstacles. With its ambitious growth plans and a focus on convenience, Greggs may well emerge as a resilient player in the evolving retail landscape.
