It’s no secret that Greggs (LSE:GRG) has faced a difficult backdrop in 2025. Bad weather, a softer consumer environment, and rising costs all dragged on performance. But in the last few weeks, Britain’s favourite bakery chain seems to be making a bit of a comeback.
Since the start of May, Greggs shares have jumped over 10% thanks to a better-than-expected trading update. So, what was in this report that has investors excited? And could this be the start of a much larger rally?
Has Greggs finally turned a corner?
Greggs’ latest headline numbers were pretty encouraging. Total sales in the first 19 weeks of 2026 rose 7.5% to £800m, while like-for-like (LFL) sales in company-managed shops grew 2.5% over the same period. But more recently, that figure improved further to 3.3% when zooming in on just the last 10 weeks.
While this organic growth is still a far cry from the double-digit expansion the business used to generate, it nonetheless reveals a re-acceleration of growth, driven in part by successful product innovation.
In management’s own words: “LFL sales performance has improved against what remains a challenging market” – a welcome signal compared to what shareholders had to endure last year.
The update also showed the company is still pushing ahead with its store expansion growth strategy.
Greggs opened 41 gross new shops in the period, with 20 net openings, taking its total estate to 2,759 locations. It also reiterated its ambition to open around 120 net openings before the end of 2026.
In my experience, companies that continue to invest in growth even during the tough times often end up outperforming their rivals. So, it shouldn’t be surprising that the company is also starting to take market share in the Food-On-The-Go sector.
But can this momentum continue?
What still needs watching?
Even with these better-than-expected results, Greggs is not out of the woods just yet.
Management still expects around 3% cost inflation on a like-for-like basis, and it warned that prolonged conflict in the Middle East could push inflation higher into 2027, translating into both margin compression as well as potentially weaker consumer spending.
There is also the timing issue around investment. The new Derby site and National Distribution Centre in Kettering are both crucial for future growth. But they will also bring extra costs in the near term before the benefits fully materialise in the medium-to-long term.
That means margins could remain under pressure in the second half of 2026 – a risk to watch carefully.
Still, overall, this trading update seems to reveal that the business is getting back on track after a challenging period. Greggs shares still have a long way to go before returning to their pre-2025 levels. But if the firm can continue to make solid progress, the stock could be worth considering again.
That’s why I’ve already added it to my watch list. And it’s not the only business I’ve got my eye on today…
Should you invest £5,000 in Greggs Plc right now?
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Zaven Boyrazian does not hold any positions in the companies mentioned.
