Greggs Profits Slump Amid Weight-Loss Drug Trend and Tough Market Conditions
The high street bakery giant Greggs has reported a significant slump in profits for the past year, with its chief executive pointing to the growing use of weight-loss treatments and persistently tough economic conditions as key factors. Despite this, Roisin Currie, the company's boss, anticipates that easing inflationary pressures could provide a much-needed boost to consumer spending in 2026.
Challenges in a Difficult Market
Greggs, renowned for its sausage rolls and steak bakes, revealed on Tuesday that statutory pre-tax profits fell by 17.9% to £167.4 million for the year ending 27 December, compared to the previous year. The Newcastle-based firm attributed this decline to a challenging market backdrop, which includes cautious shoppers grappling with the rising cost of living, higher tax and labour costs, and an unexpected spell of particularly hot weather that reduced high street footfall.
Ms Currie told the Press Association that the environment remains difficult, stating, "We have come into 2026 planning for another challenging year. When you look at consumer confidence and disposable income, you can see that the backdrop is still tough out there." She emphasised that Greggs has been resilient in the face of these adversities, with the business employing over 33,000 people across more than 2,700 sites in the UK.
Impact of Weight-Loss Drugs and Inflation
One notable factor highlighted by Greggs is the growing use of weight-loss treatments, which has added pressure on the bakery chain alongside other economic headwinds. However, there are signs of improvement on the horizon. The company noted that cost inflation has slowed from nearly 6% last year to around 3%, offering some relief.
Ms Currie indicated that "green shoots" are emerging, with easing inflationary pressures expected to support consumer spending. She explained, "Looking into 2026, easing inflationary pressures should provide some support to consumer spending, and demand for convenient food-on-the-go continues to underpin the market." This optimism is tempered by the ongoing cautious sentiment among shoppers, but Greggs remains hopeful for a gradual recovery.
Sales Growth and Expansion Plans
Despite the profit slump, Greggs reported positive sales figures, with total sales growing by 6.8% to £2.15 billion over the past year. This growth was buoyed by a continued store opening programme, which saw 121 net store openings in 2025, expanding the shop estate to 2,739 locations by year-end. The company is targeting around 120 further openings in 2026, with ambitions to grow to significantly more than 3,000 UK shops in the longer term.
Sales growth was also supported by the expansion of its delivery business and an increase in evening trade. More recently, like-for-like sales across managed shops grew by 1.6% over the first nine weeks of 2026, with total sales up 6.3% due to store openings. This demonstrates Greggs' commitment to growth and adaptation in a volatile market.
Outlook for the Future
As Greggs navigates these challenges, the firm stresses its resilience and strategic focus on expansion and innovation. While weight-loss drugs and tough conditions have impacted profits, the easing of inflation and sustained demand for convenient food options offer a pathway to recovery. With plans for further store openings and a robust sales performance, Greggs aims to strengthen its position in the UK retail landscape despite the ongoing economic pressures.
