Greggs profits drop as shoppers tighten their belts

In the United Kingdom, Greggs announced a significant decline in profits attributed to various adverse factors, including unpredictable weather and consumers' growing financial caution. The high street bakery chain revealed that its pre-tax profits had decreased by 14.3% to £63.5 million for the six-month period ending June 28, 2025. This downturn marks a stark contrast to the previous year, indicating the challenging market dynamics the company has been facing. In addition, Greggs stated that the warmer temperatures in June negatively affected the demand for its popular hot food offerings. Furthermore, earlier in the year, the business was affected by heavy snowfall and severe winds in January, compounding the impact on its sales performance during the first half of the year. Roisin Currie, the chief executive of Greggs, emphasized the ongoing challenging conditions that the high street is experiencing. She noted that consumer confidence remains low, leading many to adopt a mindset of saving rather than spending. With shoppers feeling insecure about their financial situations, foot traffic on the streets has diminished, further exacerbating the struggles faced by retailers. The cautious nature of consumers has deterred them from frequenting high street establishments, indicating a broader trend of consumer behavior that may not be limited to Greggs but observable across the retail sector. Despite the decline in profits, Greggs experienced a 7% increase in sales totaling £1.03 billion for the same half-year period, attributed mainly to new store openings. The company reported a 2.6% growth in like-for-like sales in company-managed stores and a more robust 4.8% growth across franchise sites. The bakery chain remains optimistic about its future and believes it can expand beyond its current portfolio of 2,649 stores. During the first half of 2025, Greggs opened 87 new stores, while 56 sites were closed, indicating a continued commitment to growth despite the challenging business environment. Lastly, analysts note that Greggs has historically been an accurate indicator of the overall health of the UK high street. However, the recent decline in performance raises concerns about the broader appetite among consumers, which suggests that the challenges faced by Greggs might reflect a more significant issue within the retail landscape. Mark Crouch, a market analyst at EToro, remarked on the potential implications, emphasizing the need for vigilance as the macroeconomic situation evolves. Greggs' shares also dipped by 2.2% in early trading on the day the news broke, reflecting investor concerns regarding the company's outlook in the current climate.