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What a tough five years it’s been for the Greggs (LSE: GRG) share price. Having hit record highs at the end of 2021, this FTSE 250 stock has crashed hard since. Meanwhile, the rest of the London stock market is scaling new peaks. So what went wrong for Greggs and its shareholders?
Greggs does great
Greggs the Baker was founded by John Gregg in Newcastle upon Tyne in 1939. After the first shop opened in Gosforth in 1951, the bakery chain expanded rapidly. Today, Greggs is one of the UK’s leading ‘food-to-go’ chains with over 2,600 outlets nationwide. For instance, even though I live in a tiny city in Hampshire, there are three Greggs shops in my area.
Greggs sells a wide range of savoury foods (including its famous sausage rolls, steak bakes, and vegan sausage rolls), as well as sandwiches and hot and cold drinks. When I’m travelling in the UK, I often prefer the fast, affordable, and fresh food on offer at Greggs to its more expensive rivals. And being from the North East myself, I’m delighted to support this Geordie business.
Greggs shares floated on the London stock market in April 1984. Back then, the business had 260 shops and was valued at £15m. At its all-time high, the share price peaked at 3,443p on 31 December 2021, with the business worth nearly £3.5bn. In 2022, new CEO Roisin Currie took over and, alas, it’s been steeply downhill ever since.
Shares slump
As I write, this stock stands at 1,512.5p, valuing the group at just over £1.5bn. This leaves the share price down a shocking 56.1% from its end-2021 peak. In fairness, the shares went ex-dividend for 50p a share on Thursday, 30 April, which explains today’s 2.9% price decline.
For the record, my family portfolio owns Greggs stock, paying 1,696.7p a share for our stake last July. To date, we are sitting on a paper loss of 10.9%, but this excludes dividends. And as shareholders, we will receive the above 50p-a-share dividend on 29 May. Instead of spending this cash, we will use it to buy more Greggs shares. This boosts our shareholding and also our future returns.
As for Greggs’ troubles, four issues are out of its control. First, the cost-of-living crisis keeps pushing up input costs, forcing it to lift prices. Second, the growing use of GLP-1 diet drugs are slowing its sales. Third, higher employer National Insurance contributions are curbing profits. Fourth, adverse weather conditions were a problem in 2025.
Recovery play?
For me, Greggs shares look undervalued and unloved today. The stock trades on 12.7 times trailing earnings, delivering an earnings yield nearing 7.9%. Thus, their generous dividend yield of almost 4.6% a year is covered 1.7 times by historic earnings.
Of course, this FTSE 250 stock could turn out to be a value trap, rather than a recovery play. But I see the odds tilted towards the former — especially as the group’s ambitious store roll-out continues and if/when sales growth strengthens. Hence, I am happy to sit tight and await the next trading update on 12 May!
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