Greggs (LSE: GRG) shares have endured a difficult stretch, sitting close to 19% lower over the past 12 months despite the recent surge.
Something shifted notably between May 5 and May 27 of this year, with the stock climbing 18.5% and reigniting investor interest in the well-known British bakery chain.
The primary catalyst behind that sharp move appears to be a promising trading update that offered early signs of a financial reacceleration investors had been waiting on for years.
Across the first 19 weeks of 2026, Greggs reported like-for-like sales growth of 2.5%, a figure that on its own might not have turned many heads.
The more encouraging detail, however, was that in the final 10 weeks of that same period, like-for-like sales growth had accelerated to 3.3%, signalling improving momentum.
While those numbers remain well below the double-digit growth rates Greggs previously enjoyed, they represent the first meaningful sign of a recovery trend taking shape.
Management also continued executing on its store expansion strategy, recording 20 net new openings during the period, bringing the total estate to 2,759 locations across the UK.
A larger store footprint gives the company a stronger base to capitalise on any meaningful improvement in consumer spending conditions going forward.
On the positive side, Greggs benefits from a powerful and well-established brand, with product innovation, extended evening trading hours, and delivery partnerships all broadening its addressable market.
These initiatives are helping push the bakery chain beyond its traditional breakfast and lunch customer base, opening up new revenue streams that could support longer-term growth.
Despite the optimism, significant near-term challenges remain, with consumers still under considerable financial pressure and demand for treat-style purchases potentially staying fragile.
Greggs also remains heavily exposed to cost inflation, which is already squeezing margins and could limit earnings growth even if top-line sales continue to recover.
The risk, in short, is that investors may be pricing in a recovery faster than the underlying fundamentals can deliver, leaving the stock vulnerable to disappointment if momentum stalls.
For some observers, the combination of lingering questions and the recent price jump is reason enough to stay cautious rather than chase the rally at current levels.
The latest trading update does provide a genuine and tangible reason for optimism, and the brand’s long-term resilience is difficult to dismiss for patient, long-term investors.
Whether the May rally marks the true beginning of a sustained turnaround or simply a temporary bounce remains the central question hanging over Greggs shares right now.
Investors would be well advised to monitor upcoming trading updates closely in the coming weeks before committing capital to a position in the stock.
