Only 4 weeks since unscheduled update at beginning of July, so no surprises likely Little new trading news is expected when Greggs reports 1H results on 29th July as it will be just 4 weeks since management issued an unscheduled 1H update on 2 July highlighting a profit shortfall in 1H. This was due to the hotter weather in June impacting footfall, sales and mix, after a better May. Greggs also had a difficult start to the year with January’s trading impacted by stormy weather (Storm Eowyn). Management guided to its FY downgrade mainly impacting 1H rather than 2H. We forecast 1H EBIT/PBT of £65.3m (company compiled consensus c£67m)/£59.3m respectively (FY24 1H EBIT/PBT £75.8m/£74.1m). Management reported total 1H sales up 6.9% with company-managed stores LFL +2.6%. This compares to total sales growth of 7.4% with LFLs +2.9% after the first 20 weeks, which mathematically implies LFLs of 1.6% for the final 6 weeks with June’s LFLs barely positive, we suspect. Inflation was running at c6% implying declining volumes continue. A net 31 new stores were opened in 1H with closures biased to 1H (gross 87 opened & 56 closed). Looking for reiteration of previous FY25 guidance and update on strategy Focus will be on 1) any indications on July’s LFL performance; 2) reiteration of previous FY guidance; 3) Update on range development and roll-out; 4) Progress in Evening day-part, delivery and digital penetrations; and 5) Confirmation that the investments in the new Derby & Kettering facilities are on track for opening in 2026/2027 and in-line with cost expectations. On 2 July, management guided that FY25 operating profits could now be modestly below FY24. Visible Alpha FY25 PBT consensus is £177m (INVe £176m). Other guidance, as previously given, 140-150 net openings and cost inflation c6% in FY25. Return to positive LFL volume growth needed to help short term sentiment. Long term opportunities undervalued Greggs’ share price has underperformed, down 11%/39% over 1mth/YTD in absolute terms. The share trade on a CY26E PE of 12.4x, at the bottom of its last 10 years’ forward PE valuation range, which does not reflect its growth opportunity or improving cash generation, in our view. A return to positive LFL volume growth is needed in the short term to restore confidence in the longer-term growth story and drive a re-rating, we believe. As highlighted in our note, Confronted cycles before (published 3/4/25), Greggs should emerge with a structurally higher cash margin post its current elevated investment cycle and ROCE should start rebuilding back towards its targeted 20% in FY27.