The ravages of inflation on margins for retailers are unavoidable. For the low-cost bakery chain Greggs, higher costs for ingredients, packaging and energy, together with a bigger VAT bill and the reintroduction of business rates relief, flattened profits during the first half of the year.
That trend is expected to continue over the second half, with analysts forecasting pre-tax profits of £148 million, broadly in line with last year, but not the £108 million seen in 2019. For a company that had gained a reputation for racking-up high earnings growth over the past three years, stalled momentum makes a cheaper valuation understandable. But at the current price, there is reason to think that the shares could regain a higher rating from investors.
The other source
