Weight-loss drugs seen weighing on Greggs snack sales, Jefferies says

Weight-loss drugs seen weighing on Greggs snack sales, Jefferies

Impact of Weight-Loss Drugs on Greggs

Feb 9 (Reuters) - Shares of Greggs fell as much as 6% on Monday after Jefferies warned that weight-loss drugs could curb sales and profit growth by reducing demand from the bakery chain’s most frequent customers, and downgraded the stock to “hold” from “buy”.

Market Reaction to Jefferies' Analysis

The brokerage also cut the price target on Britain’s largest fast-food chain's stock to 1,610 pence, saying wider use of GLP-1 weight-loss drugs poses a structural risk to the company, famous for its high-calorie sausage rolls, steak bakes and sweet treats.

Consumer Trends Affecting Sales

"We are increasingly of the view that the rapid uptake of GLP-1 weight‑loss drugs is impacting Greggs," Jefferies analyst Andrew Wade said in a note, adding that the company's explanation of softer consumer spending and unfavourable weather do not account for the depth of its prolonged sales slowdown. 

Broader Implications for UK Grocers

 While the typical GLP‑1 demographic may only partially overlap with Greggs’ customer base, those affected are likely to be higher‑BMI, higher‑frequency consumers, those who are most valuable to Greggs, Wade said.

Shares in the company were last down 4%, and were the top losers on the FTSE midcaps index. 

 Greggs CEO Roisin Currie in January said customers are gravitating toward smaller portions and looking for more information on protein and fibre content, and the company is refining its offer to match. 

UK grocers are beginning to feel the impact of GLP-1 weight-loss drugs, with about 5% of British adults now using the medications and sales starting to show the effects, retail bosses and analysts said last month.

(Reporting by Simone Lobo and Nithyashree R B in Bengaluru; Writing by Yadarisa Shabong; Editing by Nivedita Bhattacharjee )