By James Davey

LONDON (Reuters) -British baker and fast food chain Greggs reported sales growth picking up as the year progressed, helped by better trading conditions, including warmer weather, sending its battered shares higher.

Shares in Greggs, known for its sausage rolls, steak bakes, vegan alternatives and sweet treats, were up 6.5% on Tuesday, paring 2025 losses to 24%, after it said like-for-like sales had risen 2.9% in the first 20 weeks of the year.

That compares with growth of 1.7% in the first nine weeks which Greggs had said reflected a tough economic backdrop.

The improvement was consistent with wider developments in the British economy.

Industry data published last week showed British shoppers overcame their worries about a global trade war and sharply increased their spending in April with Easter and sunny weather boosting sales of food, gardening equipment and clothing.

"We're still cautious about the future but feeling slightly more optimistic," Greggs CEO Roisin Currie told Reuters in an interview.

She said while the spell of warm weather and April's hike in the national minimum wage had helped recent trading, UK consumers remained nervous about spending in a still inflationary environment.

"I don't think it's a cost of living crisis anymore but it's still a squeeze for certain populations; they are just being careful with their money," she said.

Currie also noted that the UK's overall food-to-go market was seeing a slight contraction, while Greggs was still seeing volume declines.

Greggs, which has more stores than McDonald's in the UK, opened 20 net new stores over the 20 weeks, bringing its total to 2,638. Ultimately it sees scope for over 4,500.

The new stores helped drive a 7.4% rise in total sales to 784 million pounds ($1.1 billion).

Growth is also being supported by the expansion of Greggs' menu, such as the introduction of Mac and Cheese, chicken burgers and fish finger sandwiches, longer opening hours into the evening, increased delivery sales through Just Eat and Uber Eats and building loyalty with the Greggs App.

Last week, Greggs raised prices on some products by up to 10 pence after a round of increases in January.

It maintained its outlook for annual cost inflation at 6% on a like-for-like basis.

In March, Greggs had forecast another "year of progress" after reporting an underlying pretax profit of 190 million pounds for 2024.

"Whilst early in the financial year, the board's expectations for the full year outcome remain unchanged," it said on Tuesday.

($1 = 0.7475 pounds)

(Reporting by James Davey; editing by Sarah Young and Tomasz Janowski)