Greggs plc

Good morning and welcome to those of you in the room. Nice to see a lot of familiar faces and welcome to those of you who are watching online. So the agenda today will be in the usual format. I will provide an overview of the results we've announced today. along with some key highlights and I'll hand over to Richard to take us through the financial performance in more detail and I'll then take you through our strategic progress and finish with the outlook for the year before I take your questions. So we continue to make progress despite challenging market conditions, as you can see from the numbers on the slide. As you can see, total sales growth for full year 25 is just under 7%, and that includes 2.4% on a like-for-like growth for company-managed shops, and not on the slide, but it's also 4.3% for our franchise shops. Underlying operating profit and underlying PVT are both in line with expectations. with operating cash inflow 4.5% higher than 2024. And we are proposing an ordinary dividend of 69 pence in line with the year before. Operating cash generation remains robust and will build further in the coming years, with CapEx also stepping back from its peak in 2025. This provides significant capacity for additional returns to shareholders, which Richard will provide more detail on in a few minutes. So we are outperforming the market. So just to spend a couple of minutes on our performance versus the market. I'm pleased to say that the recent data from Sarkana to the end of December 2025 shows that we have increased our market share of visits by 0.5 percentage points to 8.6%. at a time when the overall market visits have declined by just over 3%. Pressure on income does continue to be the main driver, and convenience for the consumer remains the priority, with location access and channel flexibility critical. There is some evidence of dietary trends, but that is a relatively small factor. The breadth of appeal we have alongside our value credentials and the continued innovation in the business focused on menu, value and convenience alongside the strength of our vertical integration ensures our resilience when market conditions are challenging, but it also remains our formula for our long-term success. So I will now welcome Richard to talk about the financial performance in detail.

Great. Thank you, Rasheen, and good morning, everybody. I'll start with slide six, which just gives you the high-level overview of the profit in the business over the last year. So you can see sales up almost 7%. We did have the reduction of 4% in operating profit and 9.4%. at the PBT level. And as we highlighted back in January, we've pulled out a small exceptional item which relates to an understatement of VAT which we self-identified but goes back a number of years. So in reporting these results, we've pulled out the element that relates to prior years so as not to distort the 2025 number. So that gives you an underlying PBT and then the full PBT for the year of 167. The income tax charge, we'll show you later, slightly higher than normal, which I'll explain, which gives us an impact on diluted earnings per share, which were down 10.7%. And we'll get into some of the ratios behind that in just a moment. But first on slide seven, we'll dive into the segmental analysis of sales. So we segment ourselves into those from company managed shops and those that are through the business to business channel, which is primarily relationships with our franchise partners that get us into locations we couldn't otherwise reach. It also includes grocery channel development in the B2B channel, which obviously has moved on slightly in the last year as we launched with Tesco, a small range with Tesco back in September. But most of the progress here relates to the addition of shops and like-for-like growth through the B2B channel. So underlying each of those, as Rasheen has already said, we've got 2.4% like-for-like through the company managed shop channel and another 4.3% like-for-like growth through franchise system sales. You can see the overall rate of growth in the B2B channel is slightly higher. That partly reflects that like-for-like position. But also the proportion of shops who are opening through franchise relationships is about a third of our net openings. So as a proportion of the base, it's a faster rate of growth in that channel. And if we look on slide eight at the relative performance of Gregg's, I mean, Rasheen's already flagged to you that we've taken a significant amount of share in the last year. This tracks one of the benchmarks that we've pulled out to give us a feel for how Gregg's has performed versus the overall food to go segment. And the yellow line on this chart is the Barclaycard data that they publish for the eating and drinking out of home segment. So that's all retailers who are identified as being serving the eating or drinking out of home. And you can see that Greg's like-for-like performance, the dashed blue line, tracks that quite closely. So our like-for-like performance has been broadly in line with the market, but we've significantly outperformed the market through the growth in our new stores and the addition of extra channels such as grocery. So total sales growth significantly ahead of the market on that measure. Turning to slide nine, the ratio analysis of the P&L here reflects some of the volume pressure and also the investments in the year which will benefit us in future years. So if we work our way down, you can see at the gross margin level a relatively stable position. We saw a more balanced position between cost and price inflation last year and a smaller amount of dilution from the increased participation rate in our app as people take advantage of the discounts available for shopping more frequently with us. In distribution and selling costs, that's where you see more of the operational gearing in the business. So there's a couple of things there. The volume impact last year has a gearing effect in terms of the fixed costs, such as rent on the shop. but also the recovery of wage cost inflation. There's a slight under-recovery there because wages were one of the most inflationary elements last year, which I'll come on and show you in a minute. So some dilution there on the ratio. And then we see the opposite effect in admin expenses, where we've controlled the overhead in the business well, and that gets leveraged more heavily as we grow the estate and spread it more thinly. So overall, underlying operating profit down by 1% in margin terms. And then you see an increase in the net finance expense. The primary driver of that is that in 2024, we were holding a lot of cash on deposit, which we've subsequently been deploying into the investment program. We obviously haven't enjoyed the interest coming in on those cash deposits in the current year. And then at the very bottom there you can see return on capital employed, which is one of the key things that we focus on as a business. The Rokey for 2025 was 16%. That reflects the investment in capital employed as we've deployed cash into the program of capital expenditure that we will update you on in just a second. But obviously the top line performance as well. We've talked in the past about that we believe 20% is a good long-term estimate for what we believe Greggs should be able to deliver. We still believe in that, and I'll describe to you in just a few moments our thoughts on how we progressively get back to that going forward. Turning to page 10, you've got the usual analysis here of Greg's cost base, which emphasizes just that people costs and food and packaging are the two biggest areas. The good news here is that we expect a much less inflationary year ahead in 2026. We saw 5.6% cost inflation in 2025. We expect that to be close to 3% in the year ahead, which is a real change from the last few years when obviously inflation has been a real headwind. Food and packaging will be part of that. We expect that to be a very low single digit figure for the year ahead and we've got about four months of our food and packaging needs covered. Energy is obviously quite a volatile market at the moment. We're pleased to say we've actually got all of our electricity covered for this year and that is the vast majority of our energy mix. And we've got more than half of it for next year as well. So we're in as good a place as we could probably hope to be, given the current environment. The main thing we were exposed on is diesel costs, which is about an eighth of our overall energy mix. So it's relevant, but not a big factor. People costs are the biggest part of the cost base and were very inflationary last year with a combination of bigger increases in the national living wage and obviously the national insurance passed through as well. So we saw just over 8% wage inflation or wage cost inflation last year. We expect that figure to be close to 4% this year, a balance of the pay award which we've made and also some annualisation of that national insurance increase. And there's a phasing impact here as well because we've negotiated to move our annual pay award. The majority of it will bite in April now. It's previously been aligned with the calendar year in January. That helps us to align more with the national living wage increase going forward. But it means that we'll have relatively low wage inflation through Q1 of this year. So there is a kind of a balance factor in terms of when cost inflation comes in this year. We think that will help the first half result, and we do expect to see relatively strong profit progress in the first half. We've guided that for the year as a whole, we expect that to be a relatively flat year because we've got the costs of the new Derby site coming in the second half. So there's a bit of trading off there between H1 and H2. And then the final piece on shop occupancy costs. Rents are relatively stable as a cost ratio. And there is some benefit from the changes to business rates. So you'll be aware that in the budget there was a change made to benefit small shops. We believe that that will benefit Greggs on an annual basis for about £4 million from April. So £3 million to the current financial year. Sticking with costs on slide 11, we obviously work each year to try and reduce our costs and to offset the cost pressures through our cost reduction initiatives. And we have a good track record in this, and 2025 was the best year ever in that respect. So we took about £13 million out of the business through our cost initiatives in 2025. I thought it was worth just giving you a bit of colour on the sort of things that we've been doing. The retail area is obviously where most of our cost is. And in that sense, using sophisticated workforce planning tools is a key element to make sure we deploy ours optimally in our shops to make sure we get the right balance of service and cost. So we've been putting a new planning tool in, which has been very effective. We've been using technology to automate non-value adding tasks and increase the speed of service. And some good examples of that are new tillware. And I hope some of you, if you've been to Greg's recently, will have noticed that the actual experience of paying at the till is actually faster. And I've certainly experienced that with our new tillware and our new payment terminals. Temperature monitoring is a huge task in our shops to make sure that we keep everything food safe and it's a very manual process currently so we've got some interesting experiments going on with automated monitoring which we think will really help the business going forward. In supply, the game there is really taking advantage of the fact that we own our own supply chain to do end-to-end reviews, which make sure we optimize the route through our supply chain all the way from our suppliers through to shops, through our distribution and manufacturing operations. And by making sure we get the right packaging and ingredients in the right sizes so they flow through really efficiently, we get a real cost advantage. So we're constantly looking at how we optimize that. We've been in-housing some of our manufacturing where we've had additional capacity come on stream that's allowed us to do that and looking forward there'll be more opportunity for automation as the new sites in our distribution chain come online. And the offices have a role to play as well. So in our support teams, technology is starting to help us with automation on desktops, new systems for customer and shop support, which are making the whole process more productive. It's meaning our teams can cope with the growth of the business without adding more resource. And increasingly, AI tools will support that even further going forward. Let's talk about CapEx now on slide 12. So you can see the peak year for CapEx in Greggs, £287 million that we invested in the business last year. And if you look year on year, you'll see that the retail side of that in terms of new shops, shop fitting and equipment was relatively stable. We had a comparable amount of activity in terms of opening shops and refurbishing them. But the big difference was in the supply chain where we invested 147 million across our operations including the new sites to create the capacity for the future. There was also a step up in IT where we're putting in the upgraded SAP system, the S4 HANA version, which is going well and we got the first elements of that installed in the summer. If I turn to the forward look on page 13, I think this is the interesting piece. So if you look beyond this year, we've got a substantial decrease in the amount of capital expenditure from this year onwards. So CapEx reduces to around $200 million. in the current year and then reduces further and we've given a range of 150 to 170 million from 27 onwards. And in looking again at the CapEx program through this phase, we obviously kind of came in under the guidance last year. We've looked hard at the out years as well. We've taken about 20, 25 million out of the capital intensity looking forward here. And the interesting thing in the backdrop to this slide is if you look at the grey sort of shadow behind, that's the operating cash generation of the business. And you can see how essentially last year we were utilising all of that in terms of the CapEx investment programme. But as we go forward... a huge gap emerges which is effectively the free cash position that will give us discretion. Obviously that has to fund the ordinary distributions in the business but we start to see some quite substantial headroom as we go through next year and onwards particularly. So scope for further returns as Rasheen indicated at the start of this. Page 14 talks about our shop estate expansion and a quick reminder first of the sort of metrics we use to manage our expansion against strong return rates. So we look for a target return rate of 25% cash return on the investment that we put into both our shop and the supply chain that supports it. And we typically achieve that after two or three years, and the shops go on to achieve a mature performance in excess of 30% on an ROI basis. And generally, the growth locations that we're moving into are outperforming the traditional estate. And we talked in the summer a lot about incremental growth and why we were not concerned about cannibalization, and just to reiterate some of the key points that we talked about then. In new catchments where we're landing shops, 53% of our shops last year were in areas where there was no existing Greggs within a mile. So we are pushing into areas where people just don't have access to Greggs. And even in those areas where there was a shop within a mile, the recorded level of sales transfer from the existing state was less than 5%. And we factored that into the shop appraisal to make sure that when we make the decision, we know it's still going to make an incrementally good return for the business. And that was proven again in 2025 with the look-back test on cannibalization. And the other great measure we have is by using the app data. So we can see from the app data that the frequency of visit for Greg's customers increases when you give them access to more shops in new convenient locations. And we ran some data that we showed you in the summer. We've rerun that again at the end of the year. And again, it confirms the incrementality of the visits and the increase in frequency that we see when we become more convenient. I mentioned Rokey earlier and slide 15 talks a bit about the levers that we'll be pulling to restore Rokey over the years ahead. Obviously that estate growth is absolutely key because growing the estate to utilise the capacity that we're creating is one of the most important elements of that. So it's great to see that we're still getting those strong returns and that that white space exists. We'll be accessing that both through our own estate growth and through the partnerships with franchise partners that give us access to areas we couldn't otherwise get to. We'll be disciplined on capital allocation and you can see we've trimmed the capex a little bit. We'll hold that as tight as possible going forward while still making sure that we maintain and invest in the business. But we're in a position where we've deployed an awful lot into the supply chain and we've got that capacity there to use. So it will reduce the amount that we need to invest in the years ahead. And as I've described to you, we continue to explore further cost-saving and productivity opportunities. The team are enthused by the success and want to drive that even harder as we go forward. And then finally, obviously, there's an element which is driven by the market and performance in that. But also, we have additional income streams that we've been pushing and accessing. You've heard about the Tesco development that we put in place in the autumn of last year. That will be a more material factor in the year ahead, and we've expanded the reach of that into more stores. Rasheen, we'll talk to you a little bit about some of the stuff that we've been experimenting with in terms of convenience retailing, where we've been looking at some concepts which will help us to access smaller locations that can't support a Greg store with both automated and manual sort of vending solutions. And there are other things in the background that we're not quite ready to talk about that we've been working on, which we believe will also leverage the Greggs brand to drive additional income in the years ahead. So more on that to come. So packaged together, we still are targeting and pushing ourselves to get that return back to where we believe it should be. Just finishing off then with balance sheet tax and dividends. The cash is in a decent position despite the big investment phase we've been through. I mean the cash inflow of £273 million is a real strength of the business at the operating level. The net cash position at the end of the year was £46 million. That was supported by £25 million drawn from the revolving credit facility, so we actually had about £70 million in cash. And we've got liquidity of 146 million with the remaining undrawn element of our RCF. So plenty of elbow room should it be required. And a quick reminder of our capital allocation priorities. Number one, invest to maintain the business well. Keep that strong balance sheet and we target about a 3% of revenue cash position just to deal with the seasonality through the year. An attractive ordinary dividend that's two times covered by earnings, and you'll see that we've maintained that again this year. And then selectively invest where we see attractive returns for growth. And then finally, of course, return any surplus cash to shareholders. That could be special dividends. It could be buybacks when we get to that point. We're open-minded about that, and we'll make that decision based on what's the best route for that cash at the time. And finally, just the figures to finish up on tax and earnings. The corporation tax rate I flagged earlier is slightly higher. It's about 1% higher than we would normally expect, and that relates to the allowability of deductions relating to share options. The fact that the great share price was lower meant that the deduction you get for tax itself on share option exercises was itself lower. So that's a temporary thing. And looking at our forward guidance, we still believe that being about 1% ahead of the headline rate is the right way to model the tax rate for Greggs going forward. So overall, the underlying EPS was 122.8 pence, and we've declared a final ordinary dividend of 50p, which gives you 69p for the full year, and that's maintained at the same level as in 2024. And as I just indicated, we look for an earnings cover of two times, and as we get back to that level, the dividend will grow again. So that's a quick rattle through. I'll hand you over to Rasheen to take you through the plan.

Great, thanks Richard. So I'll just spend a few minutes and I will talk about the operational and strategic review for the business. So on the slide behind me, you have just got the Greggs formula for long-term success. So I just want to reflect on the things that have made and continue to make Greggs successful. And these are particularly important when the market is tough because they differentiate us from other brands and they're integral to the strength of the business. So the first factor on the slide is breadth and choice that we offer our customers, enabling them to shop with us frequently. This isn't just about product range, it's also about the flexibility we have to operate in so many different locations and channels and be convenient and accessible to customers when they are on the go. Next is our value leadership and we pride ourselves on this and we have got a long-term Track record of being number one for value for freshly prepared food and drink and that hasn't changed. It continues to be a key focus area and we remain number one. Innovation and rapid evolution is of course key because food tastes and drink tastes change over time. We work hard to ensure we stay relevant and constantly innovate to drive profitable sales growth and we've got a strong track record of this for many years. Innovating to meet changing needs, dietary trends with great value options. Demonstrating has now been number one in the out-of-home market for breakfast and number two for coffee. Our focus on spotting trends and then following them fast with great value price points continues. And finally, our vertical integration drives quality and efficiency that is a genuine competitive advantage versus the market. So let me talk through those areas in some more detail. So we are the fastest growing brand in food to go. So in terms of market context, the slide in front of you is from Circana data. So it demonstrates the strength of the Greggs brand across all of the key day parts and missions. And I'm pleased to report we're number one in breakfast. We're number two in lunch. We are number three in snacking. And we are now number four in dinner and in delivery. So you can see how strong Gregg's continues to be in the traditional areas of lunch, breakfast and snacking. But I'm particularly pleased I can show you us moving up the rankings later in the day and on delivery. Areas that, as you know, we've been focusing on. As I said earlier, our market share has grown from 8.1% to 8.6%. The fastest growth of any brand in food on the go. And at the bottom, you can see, in terms of the segments that we represent, in terms of the demographics, when you compare the market share of visits with Greg's share of visits, we are pretty much in line with the market. Having broad appeal across all demographic sets is another great strength of the brand. And on to value. Value leadership remains critical for us. We remain market leading with the gaps that our food to go competitors widening. You can see that in the charts. That plots the YouGov data over the past four years. And Greg's is the yellow line at the top. Our freshly prepared food and drink, the hot options we provide and the customisation we offer ensures we are differentiated from other value operators such as the supermarkets. We also know that our loyalty scheme and the value deals that we offer continue to deepen the value for customers when they shop at Greggs. On slide 22, we're just looking at the estate and we have shown you this chart before. But it just demonstrates how the business has been evolving over the last decade to reshape and move into the new catchment areas with different customer missions, ensuring we are well positioned to be more convenient for customers on the go. Now, if you went back 10 years, then the traditional element of the state, which is the blue bar, the blue sort of segment, and mainly on high streets, that would have accounted for around 80% of our total shopping state. And as you can see, it is now 50%. In the traditional estate segment, our relocation strategy has been key to our continued success, and we've relocated around 15% of those shops since 2019, making sure that now they are in the best locations. We do treat those relocations as new shops, so they don't appear in terms of the growth in our like-for-like numbers. And in the underrepresented catchments, the new shops that we're opening expand our reach and continue to deliver strong returns. Our target for this year is around 120 net new shops, which is the same as last year. And just to bring to life the underrepresented catchments, So these are areas such as roadsides, retail parks, supermarkets, travel locations, giving the estate greater balance and accessing new locations with strong returns. We demonstrated last year, and Richard's talked about it earlier in terms of our summer presentation, these new shops do so without affecting sales in the existing estate, so it's incremental growth. The chart on the slide demonstrates a significant expansion opportunity we continue to have. So the blue bars on the slide show our current penetration. And as you can see, with the exception of industrial locations, no other location has yet reached 25% penetration. Our successful expansion strategy continues to target these areas where we currently have that low penetration, most typically remote from our current shops. So again, Richard talked about Last year, over half of our shops were opened with no Gregg shop within a mile. The planned openings for this year have a similar profile. And worth saying in terms of the numbers on the right of the chart, the white space work that we've done in terms of viable locations reflects the opportunity for our full-size Gregg shops. But we continue to be agile in terms of our formats. So the format flexibility we have and are expanding further will unlock opportunities that our smallest full service operations are simply not able to access. The trial of our first three bite-sized shops is early days but promising and we have some further trials planned very shortly which will unlock other opportunities with strong returns. And as Richard says, the innovation doesn't stop there. So we continue to come up with more innovative ways to make sure that we can provide the convenience for our customers to unlock additional customer emissions. So we are looking at some unattended retail solutions. Unattended retail solutions is the new word for vending. So we have a number of trials that are in the pipeline currently that we will talk to you about as we embark on those trials. But format evolution is complemented by increasing the channels and day parts that customers can access Greggs through, as you will see on the slide. Richard mentioned it, but we updated last year that we increased our range in Iceland and we also expanded into Tesco. We started when we talked to you last year with 800 larger Tesco stores. We had just expanded into a further 1,900 Tesco Express stores. Pleasing to say that delivery continues to grow, so it's now at 6.8% of our mix and we know that these are incremental sales and they deliver a higher basket size. We are now working on some improved technology that will mean we can support this channel better and grow it further. And loyalty, I think I've said numerous times before, continues to surpass our expectations. So now over 26% of our transactions are scanned through the app, and that allows us to increase our CRM engagement with customers. We've been doing something called Greg's Quest. We rolled that out to all of our customers in November. And really, that's challenges that encourage the customers, that rewards their visits, and encourages them to come back to us more frequently. Evening, very pleasing to see, still remains our fastest growing day part, so it's now at 9.4% of our sales, with evening delivery still being a significant growth opportunity. We continue to be really pleased with the steady growth that we're seeing in the evening day part. We're still growing ahead of the average like-for-like rate, and it's very similar to the long-term growth pattern that we established at breakfast. And at the heart of Greggs is our range. So our menu sits at the heart of Greggs and we win by delivering on our purpose, making great tasting, freshly prepared food and drink accessible to everyone. This translates to democratisation of food on the go. Rapid evolution of value-focused menu options is key to meeting consumers' changing tastes and requirements. As I've shown you earlier, Gregg is a brand with broad appeal. We are representative of all demographics and we don't over-index significantly in any one segment. Dietary trends have always been a key factor in the evolution of our menu and the breadth of choice that we offer, and we've worked hard over many years to ensure that we have choices available for everyone throughout the day. Our performance continues to be driven predominantly by the broader macroeconomic pressures on consumer spending, but we do monitor developments around weight loss medication closely. Consumers on this medication still seek convenient foods on the go, and we're already catering to a number of those dietary trends. So the demand for fibre, higher protein and smaller portions, which forms part of a much wider health trend. We have introduced last year a number of products such as our ginger and turmeric shots, our protein shakes, our egg pots and we've seen strong growth in those high protein items that we offer. But we continue to evolve the menu, we continue to make sure we keep it fresh, we keep it relevant and we excite customers with new products and new flavours. Some examples would be the tandoori chicken pizza and the red pepper feta and spinach bake. And as you would expect, we have a pipeline of new ideas and innovation to ensure that we continue to evolve the range and provide the new exciting products that our customers want. So, not sure if any of you in the room are matcha fans, but we have just introduced to the menu a couple of weeks ago our ice matcha latte at a very affordable price point of £3. So if you haven't tried it, you should rush out to a Greg's and get one. The breadth of choice that we offer and our ability to enter new categories at value prices enables and ensures that we stay relevant, excite our customers with new choices, focus on market trends and support the expansion into the new channels and day parts that we offer. And then on to our supply chain, which I have spoken about many times, but to support our growth plans, you know that we have invested in further supply chain capacity, primarily the two new state-of-art national distribution centres, creating overall logistics capacity of up to 3,500 shops. Both sites are on schedule and on budget, with Derby on track to open later this year and Kettering in 2027. This approach to capacity expansion benefits from productivity improvements from automation enabled by the scale of our operation at those sites. By picking upstream, the new sites increase the throughput and capacity of the existing radial distribution centres, which will still continue to serve our shops. I won't spend too much time on technology because Richard has covered a number of these areas, but we do continue to invest in technology to enhance our growth while ensuring the robustness of our process and driving greater efficiency outcomes. As Richard just said, we have successfully migrated our finance and procurement processes to the new SAP S4 HANA system from August last year, and we've got further migration in some key areas this year. Richard's also talked earlier about the tasks we're automating in our shops to support service and efficiency, which is really important. and the CRM capability for our support teams that has AI functionality. So our support teams can now use that to serve both colleagues and customers better and faster. And last point in the slide, our data capability continues to improve, which supports all areas of the business and helps us make better decisions. But we continue to pride ourselves in doing the right thing, with significant progress on our commitment to the Greggs Pledge, which is our approach to ESG. Our original commitments that we set out took us through to the end of 2025, so we spent a lot of time last year engaging with a broad range of stakeholders to shape the future priorities for 2026 and beyond. Really proud to say we made a significant progress across all the areas of our Greggs pledge. On the slide behind me, you've got a number of highlights. Great progress on reducing our carbon footprint, reducing unsold food waste through our Greggs outlets, and making progress in ensuring that our packaging is easily recyclable for our customers. We're retaining the three core pillars of our Greggs pledge, so stronger healthcare communities, a safer planet and a better business still stay at the heart. And we're now launching our next five-year pledge commitments. So finally, looking forward now into 2026, we have a strong pipeline of opportunities to open new Gregg shops and catchments that will deliver strong returns. Great progress has been made in building the supply chain infrastructure for this next phase of growth. In a challenging market, we continue to deliver both like-for-like and total sales growth and make great progress against our strategic plan. Our like-for-like growth for the first nine weeks has been 1.6% and total sales have grown by 6.3% with strong cost controls supporting profit progression. Our expectations for 2026 are unchanged and we remain confident in the growth opportunities available to Greggs and our ability to progress them. So on that point, I will just pause and then Richard and I will be happy to take your questions. We have got a couple of roving mics in the room and I think Richard is also going to monitor questions from those of you that are online. So thank you and I will take your questions.