Greggs has reported a slump in profits for the past year, admitting it is "still tough out there" for customers and the growing use of weight-loss treatments.
Despite this, chief executive Roisin Currie anticipates that "easing inflationary pressures" will boost consumer spending this year.
The Newcastle-based firm noted its cost inflation has slowed from nearly 6 per cent last year to around 3 per cent, yet cautious sentiment persists among shoppers.
The high street bakery chain well known for its sausage rolls and steak bakes reported on Tuesday a slowdown in sales growth over the start of the new year.
Nevertheless, the retail business, which employs more than 33,000 people, stressed that it has been “resilient” in the face of a “challenging market”.
Ms Currie told the Press Association: “We have come into 2026 planning for another challenging year.
“When you look at consumer confidence and disposable income you can see that the backdrop is still tough out there.”
Over the past year, Greggs has come under pressure from cautious shoppers affected by the rising cost-of-living, higher tax and labour costs, and the growing use of weight-loss treatments.
However, the chief executive indicated that there are “green shoots” and some of these challenges could ease over the current year.
She said: “Looking into 2026, easing inflationary pressures should provide some support to consumer spending and demand for convenient food-on-the-go continues to underpin the market.”
On Tuesday, Greggs reported that statutory pre-tax profits fell by 17.9 per cent to £167.4 million for the year to 27 December, compared with a year earlier.
It said the drop in profits was partly linked to the tough market backdrop and a “spell of particularly hot weather” which knocked high street footfall.
It also told shareholders that total sales grew by 6.8 per cent to £2.15 billion over the year, with like-for-like growth also buoyed by its continued store opening programme.
Greggs said it had 121 net store openings in 2025, expanding its shop estate to 2,739 locations by the end of the year.
It is targeting around 120 further openings this year as it highlighted ambitions to grow to “significantly more than 3,000 UK shops over longer term”.
Sales growth was also supported by the expansion of its delivery business and an increase in evening trade.
More recently, like-for-like sales across its managed shops grew by 1.6 per cent over the first nine weeks of 2026, with total sales up 6.3 per cent on the back of store openings.
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