Greggs (LSE:GRG) shares have fallen 36% over the last year. But the stock has been volatile and investors who bought low have historically seen the price rising.
The share price fell another 7% on Thursday (8 January) after an underwhelming trading update. But is this the new normal for the company or a buying opportunity for investors?
Results
Greggs recorded revenues 7.4% higher than the previous year during the last three months of 2025, with like-for-like sales up 2.9%. And there are reasons to be positive about this.
One is that it’s a sign things are moving in the right direction. Both figures are above their equivalent metrics for the full year, which indicates progress.
It also compares favourably with the wider market, which suggests that the company’s focus on customer value is proving popular. That’s not a big surprise, but it is encouraging.
There are, however, some other parts of the report that are less favourable. And I think these should give long-term investors some cause for concern.
Growth
There’s a big gap between 7.4% (the total revenue growth figure) and 2.9% (the like-for-like sales increase). And that’s a potential issue for investors going forward.
It suggests that a lot of the firm’s growth is the result of opening new stores. There’s nothing inherently wrong with this, but the company can’t go on doing this indefinitely.
Greggs increased its store count by 121 in 2025 and expects to add another 120 in 2026. But a higher store count going into 2026 means the effect on overall growth will be lower.
Given this, the 2.9% like-for-like growth is a key number for investors to focus on. And while that’s moving in the right direction, it’s not exactly inspiring on an absolute basis.
Investment equation
Greggs is currently around 50% off its all-time high. But I think investors anticipating a return to that level in the near future are likely to be disappointed.
As mentioned, at the moment, growth is being driven primarily by opening new venues. And it becomes incrementally more difficult to sustain this as the store count rises.
With like-for-like sales not much higher than inflation, there isn’t much scope for short-term optimism on that front. But there are some important positive signs for long-term investors.
The company gaining market share in a challenging period for the industry is a good thing. So if trading conditions do improve – sooner or later – things could start looking much better.
The new normal?
I don’t think investors can expect explosive growth from Greggs. But with the shares trading at a price-to-earnings (P/E) ratio of 11 with a 4% dividend yield, I don’t think they need to.
The company has shown some impressive resilience in a tough environment for the wider industry. And I think that’s a very encouraging sign of things to come.
I don’t think it takes much of an acceleration in like-for-like sales growth to make the price go higher from here. And I expect this to come when trading conditions improve.
The big question is when that’s going to come. It’s difficult to tell, but I think patient investors might want to take a look at a potential opportunity here.
