Weak Q4 backdrop to overshadow another good year of growth and strategic progress The Greggs share price is down 24% YTD, having reacted negatively to a weaker-than-expected January update, which saw Q4 sales slow more than expected and a weaker near-term outlook. A Q4 LFL slowdown was expected given tougher comps YoY as the business passed the Uber Eats launch anniversary, but weaker footfall added to the slowdown. Q4 company-managed shop LFL sales grew +2.5% (3Q +5% and 1H24 +7.4%), implying volume decline. In hindsight, the weaker backdrop started in summer, when consumer sentiment weakened, with September’s better performance misleading. Management has assumed negative 1H25 volumes. Analysts at the top end of the market expectation range trimmed FY25 growth expectations. The weak end to FY24 overshadows what was another good year of growth and strategic progress in broadening the range, opening a net 15 stores, growing the evening part and developing new channels such as delivery & digital. We forecast 10.3% growth in FY24 PBT to £185m (Visible Alpha consensus £187.2m). As already reported, total sales grew 11.3% to £2.014bn with company managed store LFL +5.5%. Cost growth was guided to come in towards the bottom end of its 4-5% guidance. FY24 year-end net cash of £125m has been reported, though there was a £27m timing benefit as the Kettering land purchase fell into FY25 rather than FY24. Management likes to keep a year-end net cash balance of £50m-60m and typically returns surplus cash above that, if there are no investment needs and depending on the outlook. Greggs has been maintaining a higher-than-normal cash position to support its multi-year supply chain investment plans. FY25 is another elevated year of capex and we expect Greggs to keep the cash since we forecast net cash to fall YoY in FY25E given guided capex plans. Focus is likely to be on trading YTD + cost mitigation progress Focus is likely to be on current trading and the outlook, particularly the cost inflation outlook, and whether anything has changed to suggest the 2H slowdown was anything more than a broader market issue. One is looking for management to reiterate its confidence on its cost mitigation strategy. Greggs already put through some price increases in December to help offset expected mid-single digit cost inflation with biggest drivers of this being labour (NI & NLW changes) and food (planned for 5-10%). The recent sell-off is a good buying opportunity for such a high-quality growth story. The shares trade on an undemanding CY26E PE of 13.8x. Concerns over cost inflation are overdone with Greggs past masters at mitigating cost inflation through selective price rises. We expect the FY24 results to reassure that growth continues, with good future new space opportunities, further strategic progress on evolving the proposition and that its supply chain investment plans to add further capacity are on track.