It’s been a while since I’ve been able to write this Greggs (LSE:GRG) shares are rising. Or it will heated up. However, after its impressive growth over the last few days, it’s time to dust off some Greggs-related puns.
Actually, calling it growth doesn’t do Greggs justice. Because FTSE250 shares are up 16.1% today (July 29), bringing the return since Monday morning to about 23.4%.
For comparison, an investment of £5,000 made at the start of the working week will already be worth around £6,175 (excluding stamp duty and trading commissions).
What’s behind this sudden upward surge?
Strong results
The catalyst for today’s jump was the company’s interim results for the 26 weeks ended June 27. Sales increased by 7.2% to £1.1 billion, with like-for-like sales increasing by 2.1% in company-operated stores. Operating profit increased by 22.9% to £86.5 million.
Growth was mainly driven by fresh store openings, with net openings of 34 in the first half of the year. However, management also noted good development of business-to-business relationships as it sells more frozen products in Iceland and Ireland Tesco.
Greggs is also doing well to address the challenges of GLP-1 medicines by introducing healthier protein-based options. For example, she added pasta salads with chicken and shrimp to her lunch offering.
New matcha drinks are also popular, and Chicken Roll, launched in April, was “exceptional success“, according to Greggs.
Costs are being kept under control and structural savings of around £11 million are expected in 2026. Greggs currently expects cost inflation to remain around 2% for the full year.
Greggs peak?
For 2026, Greggs has reduced its fresh store opening target to 100-110 store openings, down from its original target of 120. In the medium term, it plans to open around 100 net fresh stores each year, ultimately reaching 3,500 openings, up from 2,773 currently.
However, this number could raise each year if the trial version of “Greggs Express” – a smaller self-service offering – catches on. Over the last decade, Costa Express has achieved success in this format.
One last thing worth mentioning is that Greggs has gone international again. But instead of transporting the rolls to Belgium, he opened a shop at Tenerife South Airport, where around 3 million British travelers pass through every year.
The first weeks of trading in Tenerife were “very encouraging“, says CEO Roisin Currie, and I see no reason why Greggs shouldn’t do well at other international airports frequented by hordes of hungry Brits.
Stepping back, I don’t think we’ve reached peak Greggs yet. The brand could expand further by scaling up its ‘bitesize Greggs’ and ‘Greggs Express’ formats, expanding its Bake-at-Home frozen food range to supermarkets and opening more locations abroad.
Short squeeze?
Given that Greggs is one of the shortest in the UK, I strongly suspect that today’s huge jump is related to tiny sellers buying to hedge their positions. So maybe there’s still some driving to do.
Either way, I think Greggs is worth considering. I’m not going to burden myself with this because the UK economy remains unstable and people, unfortunately, still struggle financially. The ongoing war in Iran increases the risk of cost inflation.
However, Greggs operates sensibly and offers a 3.5% dividend, with management indicating plans “increase profits for shareholders” when the company enters the phase of generating more cash by 2028 at the latest.
Should you invest £5,000 in Greggs Plc now?
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Ben McPoland does not hold a position in any of the companies mentioned.
