Shares in Greggs have fallen sharply after the bakery chain suffered a slowdown in sales during the Christmas period.
Greggs said that sales in established shops rose by 2.3% year-on-year in the final quarter of the year, but this compares with growth of 5.6% in the rest of the year.
The company said the slowdown was due to a strong performance in the same period the previous year and a drop in visitor numbers to the high street.
Greggs is the latest company to warn of falling footfall on the high street in the run-up to Christmas, with clothing retailers particularly hit.
Shares in Greggs fell by 8% following the trading update. The company saw its share price surge by almost 80% in 2015 as the bakery chain fought back against the expansion of sandwich chains and coffee shops such as Pret a Manger and Costa Coffee.
Greggs has been revitalised in the last year under boss Roger Whiteside, who has broadened the company’s range of products, improved its coffee and introduced healthier options. The company now operates 1,698 outlets after opening 122 new shops and closing 74 in the last year. It also refurbished 202 shops in 2015.
Despite the slowdown in sales, Whiteside said that profits for the year would still be in line with expectations. Analysts at Shore Capital have forecast that Greggs will post annual pre-tax profits of £72.6m, up from £58.3m last year.
Whiteside said: “2015 saw us deliver another excellent year of progress as we continue to transform Greggs into a modern, well-invested food-on-the-go retailer.
“Sales growth has been particularly strong in sandwiches and drinks, including our healthier options ‘balanced choice’ range including new salads and ‘no added sugar’ drinks. Our new hot food menu, with an improved hot sandwich range and fresh soups, is also selling well as customers become increasingly aware of our new food-on-the-go options.”
Darren Shirley, analyst at Shore Capital, added: “Greggs is a strong operator in the fast-growing UK ‘food to go’ market, and we expect a further year of growth in 2016, however a very strong 2015 when the stock price appreciated over 70% we expect a more sedate stock price performance in 2016.”
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