Greggs plc Reports 7.2% Sales Growth and 22.9% Operating Profit Surge in H1 2026

Strong Half-Year Sales and Profit Growth Amid Challenging Market

Greggs plc delivered a robust financial performance in the first half of 2026, with total sales climbing to £1,101.5 million, representing growth of 7.2% compared to the equivalent 26-week period in 2025 when sales totalled £1,027.7 million. This expansion was driven by a combination of like-for-like sales growth, new shop openings and development of the grocery retailing channel through partnerships with major supermarket operators. The company's ability to achieve this sales momentum in a period characterised by subdued consumer confidence underscores the strength of its value proposition and brand resilience in the food-to-go sector.

Profitability improved significantly, with operating profit jumping 22.9% to £86.5 million from £70.4 million in H1 2025. Pre-tax profit increased 19.7% to £76.0 million, up from £63.5 million in the prior-year half. The company's Chief Executive, Roisin Currie CBE, attributed this improvement to profitable growth achieved against a soft comparator period, alongside gains from the grocery business, stringent cost control and the phasing of cost inflation. Diluted earnings per share rose to 54.9 pence from 45.3 pence in H1 2025. These results demonstrate management's ability to leverage operational leverage whilst maintaining disciplined cost management, a critical competency for a value-focused retailer operating in an inflationary environment.

Market Share Expansion Despite Wider Food-To-Go Sector Contraction

A standout achievement in the H1 2026 results was Greggs' successful market share capture in an otherwise contracting food-to-go market. According to data from Circana CREST covering the 12 months ended June 2026, Greggs increased its share of visits in the food-to-go sector by 0.3 percentage points to 8.7%, even as the overall market experienced a 1.9% decline in visits. This counter-cyclical performance, whilst the broader eating and drinking out-of-home market faced headwinds, highlights the company's competitive positioning and the appeal of its value-led offering to cost-conscious consumers navigating pressures on disposable income.

Like-for-like sales metrics underpin this market share achievement. Company-managed shop like-for-like sales grew 2.1% in the first half, whilst franchised shop like-for-like system sales increased 1.3%, both measured against the equivalent 2025 comparable period. The announcement states that these performances reflect the strength of brand momentum and the effective execution of the company's menu innovation strategy. Card spending data analysed by the company confirmed continued outperformance of the wider eating and drinking out-of-home market during H1 2026. This performance is particularly significant given that market data indicates pressures on disposable income remain the biggest influence on consumer behaviour in the food-to-go sector, making Greggs' value positioning a material competitive advantage.

Estate Expansion Strategy and Introduction of New Store Formats

Greggs continued its disciplined approach to shop estate expansion in H1 2026, opening 65 new shops (including 27 franchised units) whilst closing 31 shops, resulting in a net addition of 34 shops. The total estate reached 2,773 shops as at 27 June 2026, of which 627 were franchised operations. The company expects to achieve 100 to 110 net new shop openings during the full 2026 financial year, with medium-term targets calling for at least 100 net openings per annum. Over half of recent new openings have been located in non-traditional high-street sites such as petrol forecourts, supermarkets, retail parks, hospitals and university campuses, reflecting the company's strategy to increase customer access to Greggs beyond conventional town-centre locations.

Notably, the company is testing two new smaller-format concepts designed to unlock additional growth opportunities. The 'bitesize Greggs' format, a smaller shop suitable for locations with space constraints, has had four shops opened to date with four more expected in the second half of 2026. A second innovation, branded 'Greggs Express', represents a self-service coffee and food offer designed for convenience retailing sites. Three 'Greggs Express' installations are currently in trial with a franchise partner, with the announcement indicating expansion of trials in the second half of the year. These trials are excluded from the shop opening numbers cited. In May 2026, Greggs opened its first shop outside the UK, a partnership with global travel operator Lagardère Travel Retail at Tenerife South Airport, with early trading described as very encouraging. The company's assessment of catchment opportunities continues to support its investment thesis of creating supply chain capacity to reach at least 3,500 shops over the longer term.

Menu Innovation Driving Like-For-Like Sales Performance

Menu development has been a key contributor to like-for-like sales growth, with the company introducing products aligned to evolving consumer food trends and preferences. The announcement highlights several successful launches during the first half. The new Chicken Roll, launched in April 2026, has been described as a standout success, quickly establishing itself as a customer favourite alongside the iconic Sausage Roll and Vegan Roll. The company has strengthened its hot food and pizza offering with products including the Tandoori Chicken Pizza Slice, reflecting a strategic focus on introducing bolder, contemporary flavours that appeal to a broader customer base.

Beyond savoury products, Greggs has enhanced its salad range with new and reformulated recipes relaunched in May 2026, including options such as Chicken Caesar Salad and Prawn Layered Pasta Salad. The announcement indicates that product labelling has been enhanced to facilitate easier access to nutritional information, including protein content details. The drinks range has been energised through flavour-led innovation, with the launch of Iced Matcha Lattes described as supporting appeal to new and younger customers. The company emphasises that these launches reflect its strategic focus on relevance and innovation whilst maintaining the familiar quality customers expect from Greggs. Management has explicitly noted that menu development has contributed to market outperformance, with the Iced Matcha Lattes and the new Chicken Roll specifically identified as supporting first-half like-for-like sales growth.

Digital and Loyalty Channels Driving Customer Frequency

The Greggs App continues to be a significant engagement tool, with the loyalty programme now scanned in 31.0% of company-managed shop transactions in H1 2026, up from 25.7% in the prior half-year. The App offers a free product for every nine purchased, incentivising repeat visits. Notably, customers using the App continue to shop more frequently with the brand. The announcement states that the company has further developed and trialled app-led promotional activities, citing an example of a double-stamps offer on different daily bake products that drove profitable growth. The announcement indicates the company has further plans to leverage customer engagement through the App platform.

Home delivery made up 6.9% of the sales mix in H1 2026, marginally higher than 6.8% in H1 2025. Three-quarters of company-managed shops now accept orders via Just Eat and Uber Eats, with delivery sales described as incremental to the walk-in business. The announcement notes that the basket value of delivery orders tends to be around three times that of walk-in customers, representing a material opportunity. The company is exploring ways to extend the reach of delivery offerings to additional partners and time periods, particularly the evening daypart where the delivery market is particularly strong. More than 70% of boxed pizza sales are made via delivery partners, indicating strong product-channel fit for certain product categories.

Structured Cost Management and Supply Chain Investment Programme

Cost control remains a strategic priority for Greggs as a value-focused retailer. The company is targeting circa £11 million of structural cost reduction in 2026, of which £7 million has already been delivered in the first half. The announcement indicates strong operational control has been maintained to manage key variable costs, with this focus having been stepped up from the second half of 2025. Management acknowledged that cost savings will provide less of a tailwind to second-half 2026 performance but indicated strong plans are in place for future years to explore further efficiency opportunities that will increase productivity and support strong returns on capital.

Greggs is investing in significant supply chain infrastructure to support medium and longer-term growth. Two new National Distribution Centres are under development: the Derby site, a 23-acre facility expected to be fully operational by the end of 2026, will include upstream robotic picking of frozen goods and a new production line; the Kettering site, planned for 2027 operability, will incorporate increased automation for upstream picking of chilled and ambient goods. These investments are designed to release capacity in existing Radial Distribution Centres. During H1 2026, the company continued migrating business processes to the SAP S/4HANA platform, with modules relating to manufacturing, logistics and stock replenishment now implemented. The forecasting and replenishment element utilises machine learning and is supporting waste cost reduction. The announcement notes that agentic AI has been accelerated, with software engineering teams now using AI agents to speed up development of new systems and improve internal and external support services, thereby increasing productivity and driving innovation.

Capital Expenditure Guidance Reduced as Investment Peak Passes

Capital expenditure during H1 2026 totalled £77.8 million, materially lower than the prior-year figure of £172.1 million, reflecting the substantial completion of the Derby distribution centre and a smaller number of company-managed shop relocations and refits. The company has reduced its forecast capital expenditure for the full 2026 financial year from £200 million to approximately £180 million. This represents a significant reduction from the 2025 actual capital expenditure of £287.5 million. The announcement indicates that the peak of the investment programme is firmly behind the business.

The period-end net cash position stood at £15.9 million as at 27 June 2026, compared to net cash of £32.3 million at 27 December 2025. Cash and cash equivalents totalled £30.9 million with £15.0 million drawn on the revolving credit facility. The overall cash outflow in H1 2026 was £16.4 million, excluding a net £10 million repayment of the revolving credit facility. This represents a significant reduction from H1 2025, which saw a cash outflow of £129.8 million excluding a net £35 million drawdown. The company extended its revolving credit facility to June 2029, providing £100 million of committed liquidity. The balance sheet shows a net current liabilities position of £156.6 million at the half-year point, compared to £151.9 million at 28 June 2025. Management expects the business to move to a more cash-generative phase as the Derby and Kettering sites are completed and capacity is utilised, positioning the company to increase shareholder returns in line with its capital allocation policy.

Dividend Maintenance and Return to Capital Allocation

The Board has declared an interim dividend of 19.0 pence per share for H1 2026, maintaining the dividend at the same level as the 19.0 pence paid in H1 2025. The dividend will be paid on 9 October 2026 to shareholders on the register at the close of business on 11 September 2026. The company has indicated its expectation that the ordinary dividend will be maintained until it is two times covered by underlying earnings, reflecting a measured approach to shareholder returns that balances capital investment requirements with investor returns.

As the company moves beyond the peak of its supply chain investment programme, management has signalled an expectation to increase returns to shareholders in line with its capital allocation policy. The reduction in capital expenditure guidance for 2026 and the anticipated normalisation of investment in coming years suggests capacity may emerge for enhanced shareholder distributions. The company remains focused on restoring return on capital employed to its target of around 20%, a key metric indicating management's commitment to capital discipline and shareholder value creation. This pivot towards a more cash-generative posture reflects confidence in the maturation of the current investment cycle and the company's ability to sustain profitable growth from the expanded operational infrastructure.

Inflation Outlook and Currency Risk Management

The company experienced overall cost inflation of 2.2% in H1 2026 and now expects this level of cost inflation for the year as a whole. This represents lower-than-anticipated levels of inflation, which the announcement identifies as a factor supporting the strong first-half performance. Looking forward, Greggs has taken a disciplined approach to managing input cost risks. Energy pricing is largely fixed for the remainder of 2026, whilst the company holds approximately 50% cover in respect of 2027 energy requirements. Forward purchasing in respect of food and packaging inputs covers around 70% of requirements for the second half of 2026. These hedging positions provide visibility over a material portion of near-term cost exposure, mitigating the risk of sudden margin compression from commodity or energy price shocks.

The company's effective corporation tax rate for the period was 26.0%, in line with guidance and down from 26.8% in H1 2025. Management expects this rate to apply to the 2026 financial year as a whole. Looking forward, the effective rate is expected to remain around one percentage point above the headline corporation tax rate, principally due to expenditure with no tax relief such as depreciation on properties acquired before the introduction of structures and buildings tax allowances and acquisition costs relating to new shops. Finance expense increased to £11.3 million in H1 2026 from £8.2 million in H1 2025, driven by the £10.8 million IFRS 16 interest charge on lease liabilities relating to new shop openings and the regearing of leases at higher interest rates, with £0.5 million relating to the company's financing facilities.

Strategic Progress and Board Outlook for Full Year 2026

The Board has indicated that its expectations for the full-year 2026 outcome remain unchanged following the strong H1 performance. This guidance maintenance, combined with acknowledgement that cost savings will provide less of a tailwind in H1 versus H2, suggests management expects normalization of operating conditions in the second half. The company anticipates a step-up in operating costs as the new Derby distribution centre goes live, representing a planned investment in future capacity rather than an adverse cost development. The strength of brand momentum, demonstrated by market share gains and the successful execution of menu innovation, provides management with confidence in the company's ability to sustain sales momentum in what remains a challenging market environment.

In its evolved Greggs Pledge report published in April 2026, the company set out five-year targets to 2030 organised around three pillars: building stronger, healthier communities; making the planet safer; and striving to be a better business. Key elements of the plan include empowering communities through The Greggs Foundation's Community Action Fund, maintaining climate ambitions and accelerating progress to build a more diverse leadership pipeline. This strategic framework, paired with the company's disciplined approach to estate expansion, innovation and capital deployment, positions Greggs to sustain competitive advantage in the food-to-go sector. Management's commentary on the significant growth opportunities that lie ahead, coupled with confidence in building the supply chain infrastructure required to support expansion to at least 3,500 shops, suggests conviction in the long-term growth trajectory of the business.