Greggs downgrade after half baked results

As Greggs announce disappointing interim results Nick Raynor, investment adviser at The Share Centre, explains why he has downgraded his recommendation to a ‘hold'.

"Being famous for cheaper products has not been enough to encourage the flow at Greggs in the first half of the year, as they announce pre-tax profits were down to £17.3m from £18.6m for the same period last year. This fall was despite the company opening a number of new stores.

"Also, like for like sales are only marginally higher, rising just 0.4%, causing some concern.

"Trading conditions have been more difficult than imagined, but the company does not see the need to revise forecasts and believes previous figures are achievable. However, analysts and investors alike would have been hoping for something more positive.

"Due to this average set of results and the affects of the turbulent markets, we are reducing our recommendation for investors to a ‘hold'. Investors sat on a profit may want ‘sell' Greggs and take the opportunity the weaker markets are creating. There will be stocks out there that may give a quicker return once the market finds the bottom."