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A weak begin to 2026 means Greggs (LSE:GRG) shares stays one of many FTSE 250‘s worst performers of current instances. At £15.89 per share, the bakery chain has slumped 23.8% in worth over the previous 12 months.
To place that into context, 101 shares purchased at a complete price of £2,106 this time final yr would now be price £1,605. Dividends of roughly £70 would have taken the sting off, however traders would nonetheless be a lot worse off.
I’m a kind of shareholders who’ve been left nursing an enormous paper loss. However I feel Greggs’ share value will rebound strongly from present ranges. Right here’s why I feel it has the recipe for a shocking restoration.
Customers strike again
Complete UK retail gross sales rose 2.7% within the 4 weeks to January, in accordance with KPMG and the British Retail Consortium (BRC). That was the quickest fee of development since August 2025, and higher than the two.3% development common over the earlier 12 months.
Laying the foundations
The query is, can this uptick in client spending proceed? It’s fairly doable, as falling rates of interest immediate folks to loosen the purse strings additional. The Financial institution of England is tipped to chop charges one other two-to-three instances over the course of 2026.
But Metropolis analysts aren’t anticipating a sudden transformation in Greggs’ prime line. Boosted by new retailer openings, they suppose the baker’s whole gross sales will rise 7% this yr, matching the anticipated development fee for 2025.
I feel that is the extra sensible state of affairs for Greggs. In different phrases, a interval of stabilisation earlier than development heats up in 2027, given the robust spot the UK economic system nonetheless finds itself in.
What might drive Greggs’ gross sales?
Greggs is about to proceed opening new shops, with one other 120 deliberate for 2026. It’s constructed the logistics and manufacturing infrastructure to assist as much as 3,500 retailers (there have been 2,739 as of 27 December). And critically, the lion’s share of those websites will likely be located in additional lucractive places like journey hubs, which will likely be essential for future gross sales and earnings development.
There’s no assure these steps will likely be profitable, after all. A recent downturn in client spending will impression their efficiency. It additionally has to battle excessive aggressive pressures, worsened by the growth methods of main rivals.
Nonetheless, the FTSE 250 agency’s capability to outperform the broader market provides me some confidence. And ongoing menu refreshment and drives into supply and night buying and selling to spice up gross sales add to my feeling that it’s heading in the right direction.
In the present day Greggs shares look filth low cost, buying and selling on a ahead price-to-earnings (P/E) ratio of simply 12.5 instances. At these ranges, traders might be tempted if current gross sales momentum continues.
