An improvement in trading during September wasn’t enough to convince the market that Greggs (GRG) can recover quickly from the pressures of Covid-19. Its shares fell 3% on 29 September, leaving them languishing at a two-year low.

The retailer is adding back items to its menu after only selling a limited range during the crisis. It is also pressing ahead with plans to open new stores. To save money and avoid widespread job losses Greggs is thinking about cutting the opening hours for its stores.

The risk of more localised lockdowns, and even the potential for another nationwide one, is a major obstacle for Greggs’ recovery plans. It could see reduced footfall to its stores and put an end to recent positive sales momentum. 

Greggs says delivery orders now account for 2.6% of company-managed shop sales. Even if delivery orders trebled it may not be enough to offset the loss of in-store earnings in a tougher lockdown environment.

Shore Capital analyst Clive Black says: ‘Greggs, through no fault of its own, has had its world turned upside down.’ He says the ongoing lack of earnings guidance from Greggs means it is impossible for him to issue any forecasts.

‘We believe it may not be until (calendar year) 2023 before the Group can return to a) CY2019 earnings levels and b) maybe even later still for prior medium-term pre-coronavirus forecasts to be reached, noting the material slowdown in store openings,’ adds the analyst.

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