Greggs Q4 2025 Trading Update
Peak Capex, Trough Valuation?
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Greggs released its Q4 trading update this week. Here’s the full breakdown.
Sales Performance
Q4 total sales rose 7.4% year-over-year, with company-managed shop like-for-like sales up 2.9%. For the full year, total sales increased 6.8% to £2,151 million, up from £2,014 million in FY24. Like-for-like sales grew 2.4% compared to the prior year.
The company outperformed a challenging market, gaining market share despite subdued consumer confidence and weather extremes. Market share increased particularly in the breakfast and evening segments.
Store Expansion
Greggs opened 207 new shops in 2025, resulting in 121 net new openings. The estate now stands at 2,739 shops trading at year-end. Management expects to open around 120 net new shops in 2026, maintaining a strong pipeline.
Notably, the company opened its first three smaller-format “Bitesize” shops to access high-footfall, space-constrained locations. This could open up a new avenue for expansion.
Financial Position
Net cash at year-end was £47 million, down from £125 million in 2024. The decline reflects heavy capital expenditure on supply chain infrastructure.
A one-off £4.5 million sales tax cost related to previous years will impact reported profit.
Operational costs were well controlled, with £13 million in efficiencies delivered in 2025.
Capital Expenditure
This is the important bit. Greggs confirmed it is past the peak of its capital investment cycle.
The largest components of recent spending - the Derby frozen logistics facility and the Kettering chilled/ambient distribution centre - are now largely complete. The Derby facility will begin phased roll-out mid-2026.
Capital expenditure peaked in 2025. Management guided to significant reductions in 2026 and further again in 2027. The company expects to transition from net cash consumption to net cash generation as capex moderates.
Updated numeric guidance for 2026 capex will be disclosed on 3 March 2026 during preliminary results.
Outlook
Management’s tone was cautious. Subdued consumer confidence and market headwinds are expected to persist into 2026. Like-for-like cost inflation is expected to be lower in 2026, but margins may face temporary pressure from new supply chain costs.
Profits in 2026 are expected to be at a similar underlying level to 2025, with any improvement dependent on consumer recovery. Full year profit before tax for FY25 is expected to be in line with previous expectations, excluding the one-off tax item.
The market didn’t like this cautious consumer outlook and the stock proceeded to sell off.
So what does the investment case look like now?