Next week on the stock market

Greggs’ valuation has come under pressure in 2025 after a challenging start to the year. First-half sales rose 7.0% to just over £1.0bn, driven largely by new store openings. Like-for-like sales growth hasn’t been as strong as markets originally hoped, rising at a slower pace of 2.6%, while operating profit fell 7.1% to £70mn. This decline reflects ongoing inflationary pressures and costs related to building two new national distribution centres.

The broader consumer spending environment remains fragile. While Greggs has relied on price increases to support like-for-like sales growth, the company must be careful not to stretch customer tolerance too far.

Despite current challenges, full-year guidance remains unchanged, with operating profit expected to come in modestly below 2024’s £195mn figure. That puts added pressure on next week’s third-quarter numbers to show an improvement in momentum. With cash flows coming under pressure and the group falling into a small net debt position, strong execution will be critical in the months ahead.

Tesco started the year on a solid footing, delivering like-for-like sales growth of 4.6% in the first quarter, led by a strong 5.1% increase in the UK. Central Europe and Booker also contributed positively, reinforcing Tesco’s broad-based momentum.

Despite the strong start, the group expects full-year underlying operating profits to land between £2.7–3.0bn, just below last year’s £3.1bn. This cautious stance reflects concerns around a potential price war in the grocery sector. We’re not convinced that’s the case, and view the current outlook as a touch conservative.

Tesco’s scale advantage, sharp pricing strategy, and the ongoing success of the expanding Tesco Finest range puts it in a strong position to maintain customer loyalty and gain market share. If current trends continue, there could be room for guidance upgrades as the year progresses.

J D Wetherspoon has been resilient this year, and expects to post like-for-like sales growth of around 5.1% in final results next week. However, the additional cost burden from higher wages and taxes means that profit growth is proving harder to come by. Analyst forecasts imply that operating profit has flatlined at around £140mn.

Meanwhile the company’s guided that net debt will land at around £720mn up from £660mn a year earlier. It’s no surprise therefore that the market expects the recently re-introduced dividend to remain flat at 12p per share. But this can’t be assured.

Our attention will be firmly focussed on the outlook. Some signs of sluggishness in the pubs and restaurant sector are already evident in the early part of this year. We think the group remains competitive, but challenging conditions could be exacerbated if the November budget reveals either further cost increases or a squeeze on spending power.