A lot of people associate Greggs (LSE: GRG) with tasty treats. But there is nothing tasty about how Greggs shares have performed this year.
Specifically, since the start of 2025, the share price has gone down by 42%.
So someone who invested £1,000 in January would have seen the value of their shareholding decline to around £580 at this point.
Greggs does pay dividends. Its yield of 4.2% is actually attractive, in my view. But it pales into insignificance when put in the context of the share price fall this year.
Here’s why the Greggs share price has tumbled in 2025
What has been going on?
After all, Greggs has a very strong brand, a proven business model and has been growing sales revenues.
In the most recent quarter, for example, sales were up 6.1%. The first nine months of the year showed a 6.7% sales increase.
A couple of key reasons lie behind this year’s decline in Greggs shares, I reckon.
One was an unexpected profit warming after a sunny start to the summer left the chain scrambling to serve up what customers wanted.
That alarmed the City. That was not just because of the sales hit, but also because it raised concerns about how well the company understands its market. Sun in summer is not exactly a shock, even in Britain!
Another worry is fairly weak sales growth. The numbers I quoted above are robust – but they are total sales. New store openings flatter any comparison with prior periods.
When comparing like for like, however, Greggs has seen sales grow this year – but at a modest 2.2% in the first nine months of the year (in company-managed shops). When taking the impact of inflation into account, that is barely growth.
Has the fall been overdone?
Clearly, Greggs management has its work cut out to persuade investors that the company’s shares are worth anything like what they sold for at the start of the year.
As a long-term investor, however, I have seen the baker’s woes as an opportunity for me.
I had long been eyeing the business as a possible addition to my portfolio. Its market positioning is unique, it has legions of loyal fans and economies of scale help it make a decent profit. However, Greggs shares were too expensive for me to swallow.
This year’s share price fall has brought them to what I see as an attractive price level – and I have been buying.
For now, I am happy to sit back and hopefully let the dividends pile up over time.
From a longer term perspective though, I plan to hang on to my Greggs shares.
I am hoping that, having fallen 42% this year, the company’s sales growth, profits and ongoing expansion opportunities can help the share price stabilise – and maybe ultimately move even higher than before!
