Walking down a typical UK high street, you’ll probably see a Greggs store. By mid-2025, the British bakery chain had almost 2,650 outlets selling ‘food on the go’. But while the group has been a great British success story, Greggs (LSE: GRG) shares have been rolling downhill like a dropped sausage roll.
Greggs grows
Greggs started out from humble beginnings in Newcastle upon Tyne in 1939, with John Gregg selling goods by bicycle delivery. John opened his first shop in Gosforth in 1951, and his sons continued to expand the business after John’s death in 1964. Today, millions of customers pop into a Greggs each day to buy sausage rolls, sandwiches, hot drinks, and so on.
As a young lad growing up in the North East in the 1970s, I saw ever-more Greggs stores in my region. Rapid expansion and acquisitions led to the group listing on the London stock market in 1984. The chain’s current goal is to expand its estate to 3,000 stores.
Shares slump
The Greggs share price crashed hard during 2020’s Covid-19 lockdowns. Then, as the pandemic receded, the shares soared to new peaks. At end-2021, they closed at 3,337p, but they have never hit those heights again.
At its 52-week high, this FTSE 250 stock hit 2,890p on 8 January 2025, but plunged to a one-year low of 1,499p on 29 July. As I write, the shares trade at 1,562p, valuing this business at £1.6bn.
Greggs shares have crashed 43.7% over the past year. Over five years, the stock is up 16.4% — well behind the FTSE 100 index’s five-year gain of 64.1%.
Then again, the above returns exclude cash dividends, which are pretty generous from the bakery chain. After recent falls, Greggs stock trades on a modest multiple of 11.1 times trailing earnings, delivering an earnings yield of 9%. This means that the market-beating dividend yield of 4.4% a year is covered more than twice by historic earnings.
We bought Greggs
Disclosure: my family portfolio bought this stock on 2 July for 1,683p a share. To date, we are nursing a paper loss of 7.2%, excluding the interim dividend of 19p a share due on 10 October.
I decided to buy Greggs shares for three reasons. First, when the disappointing first-half trading update on 2 July sent its shares plunging, I leapt aboard, hoping that Greggs was a ‘fallen angel’ rather than a ‘falling knife’.
Second, as a value and income investor, I saw the lower share price boosting the dividend yield. Third, as a lad from the North East, there was some sentiment behind my decision to become part-owner of a leading Geordie business.
So far, buying Greggs stock has left me with egg on my face — but not from one of its wide range of sandwiches. Alas, sales growth has slowed, higher employer National Insurance contributions have dented profits, and estate expansion is easing off.
Then again, boss Roisin Currie claims unusual weather affected 2025’s results — an easy excuse for retail CEOs. Still, she argues that the UK has not reached ‘peak Greggs’, so there is room for future growth.
I expect Greggs to come good in the long term and its shares to follow suit. I intend to hold tight to my shares into 2026 and beyond.
