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Investing.com -- Greggs (LON:GRG)’ pricing position has softened against some operators, but only marginally, according to a Jefferies research update following the company’s profit warning last week.
Jefferies updated its Sandwich Price Tracker, finding that Greggs’ sandwich prices increased by 6% over the last year.
This increase is in line with Sainsbury ’s (LON:SBRY) (5%) and Boots (7.5%), but exceeds price changes at Tesco (LON:TSCO) (unchanged), Pret (unchanged), and M&S (LON:MKS) (1% increase).
The two-year data shows a similar pattern with Greggs prices up 10%, comparable to Sainsbury’s (9%) and Boots (12%), but ahead of Tesco (5%), M&S (3%), and Pret (1%).
Jefferies noted that the data aligns with Greggs’ own commentary about a 4-5% price increase at the beginning of the year, plus another 1-2% in May.
Despite the relative price position softening, Greggs remains significantly cheaper than most sandwich competitors like Boots, M&S, and Pret.
The research firm continues to believe that Greggs’ recent profit warning was primarily weather-related rather than indicating a fundamental decline in brand appeal.
They noted that Greggs’ like-for-like sales of approximately 4% through March, April, and May actually performed better than expected.
Jefferies views the current situation as a buying opportunity, highlighting Greggs as a value operator with a well-loved brand, consistent long-term market share gains, strong margins, and new store expansion opportunities offering cash returns exceeding 30%.
The firm also pointed out that Greggs’ valuation is currently around its 10-year low point.