Greggs plc

Greggs reported H1 2026 total sales growth of 7.2% and company-managed like-for-like growth of 2.1%. Profit before tax was GBP 76 million, up 19.7% year over year, and diluted EPS increased to 55p from 45p. Operating cash flow rose 18.3%, with interim dividend held at 19p. Management said gross margin benefited from lower food and packaging inflation, while full-year inflation is now expected to be more like 2% versus 3% at the start of the year. For the full year, the Board’s expectations were unchanged, and Richard Hutton said profit progress is expected to be broadly flat year on year because Derby operating costs will increase by about GBP 10 million in the second half; company-managed like-for-like was described as cash positive but still volume negative, and CapEx guidance was reduced from GBP 200 million to GBP 180 million.

Roisin Currie framed the business as being in a strong strategic position, emphasizing Greggs’ value leadership, brand strength, and ability to win market share while staying relevant through innovation. She highlighted progress in multichannel expansion, including grocery, convenience, travel, and new formats, and said the business is now moving into a phase of stronger free cash generation as capital intensity falls. Her tone was upbeat but measured, repeatedly stressing disciplined execution and profitable growth rather than chasing openings for their own sake.

Richard Hutton focused on the improving cost and cash picture while explaining the accounting and phasing effects behind the numbers. He said lower food and packaging inflation, about GBP 3.5 million a year of business rates relief from April, and GBP 7 million of H1 structural savings versus an GBP 11 million full-year target helped margins, while people costs are rising around 4% across the year. He also noted second-half Derby operating costs will rise by about GBP 10 million, CapEx guidance has fallen to GBP 180 million from GBP 200 million, cash inflow was GBP 111 million in H1, net cash improved to GBP 16 million, and the revolving credit facility has been extended to June 2029 with GBP 100 million committed. He reiterated that cash on the balance sheet should be about 3% of turnover, roughly GBP 70 million at year-end, and that surplus cash would be returned via special dividends or potentially buybacks.

Analysts pressed on July trading, cash returns, lower cost inflation, and whether franchise and grocery are fading. Management said July has been stronger than the reported H1 run-rate and slightly ahead of forecast, with hot weather still suppressing demand but a broader range including salads, iced drinks and matcha helping resilience. On capital returns, Richard said cash should be around 3% of turnover, with anything above that considered surplus and likely returned to shareholders through special dividends or possibly buybacks. They also said franchise like-for-like is still slightly ahead of company-managed once one partner’s operational issues are stripped out, and that grocery still has room to grow with existing partners Iceland and Tesco. Investors also asked about Derby/Kettering phasing, and management said next year will be a pinch point as Derby annualizes and Kettering begins, with stability expected to return from 2028.