Deutsche Bank has issued a sell recommendation on Greggs PLC (LON: GRG), citing concerns over slowing like-for-like sales growth and increasing pressure on profit margins.
The bakery chain reported an underlying profit before tax of £190 million for 2024, marking a 13% increase and slightly exceeding consensus expectations.
However, Deutsche Bank highlighted a slowdown in sales growth at company-managed stores, with like-for-like sales growth declining from 2.5% in the final quarter of 2024 to 1.7% in the first nine weeks of 2025.
Greggs attributed its slow start to the year to poor weather conditions in January, noting that trading improved in February.
However, Deutsche Bank cautioned that profit margins could remain under pressure despite the company’s ongoing expansion.
The bakery chain opened a net 145 stores over the year, bringing its total estate to 2,618 locations. It is also advancing initiatives such as evening trade, which now accounts for 9% of sales at company-managed shops, up from 8.5% in 2023.
While Greggs continues to expand its delivery network and strengthen its digital presence, Deutsche remains cautious on the stock, setting a price target of 2,000p—above its current price of 1,864p (down 2%). The stock has declined 40% over the past six months.
Best known for its sausage rolls and expanding vegan range, Greggs has been diversifying its offering with extended opening hours, an expanded menu, and partnerships with Just Eat and Uber Eats for online delivery.
“Greggs has limited control over consumer sentiment but continues to perform well in a tougher market, with its value-driven offering helping to sustain market share,” said Hargreaves Lansdown analyst Matt Britzman.
“On the bright side, Greggs’ growth drivers—including store expansion, delivery services, evening trade, and digital channels—continue to show strong momentum, offering investors optimism that the company can navigate sector headwinds.”
