Parsley Box cuts losses, but sales below forecast
Scottish ready meals company Parsley Box Group says it has reduced its losses, but orders have fallen and sales will be below expectations.
In an update on the first five months of the year, the Chris van der Kuyl chaired company said product development has continued “at pace” and stock levels have stablished following the completion of a lower than expected fundraise of £6.1m.
The AIM-quoted group, whose shares have plummeted since its flotation in March last year, said its drive to improve returns on marketing spend remains the key focus with campaigns to win back lapsed customers and new customer acquisition.
“We have made some progress. For the 5 months ending 31 May, the adjusted EBITDA loss is circa 10% better than management expectations, with losses reduced by circa 44% from the prior year,” said the Edinburgh-based company in a statement.
“Average order values have continued to grow at a double-digit rate, with good stock availability and ongoing product development supporting the growth in basket size. However, to date, order volumes have been behind expectations.
“As a result of the lower order volumes, sales for the 5 months ending 31 May 2022 are circa 11% below management expectations.
“We have focused on delivering gross margins, with process improvements made to order fulfilment delivering gross margin improvements that have more than offset product and delivery cost inflation , and overheads have been well managed.”
Jo Coomber, formerly of the National Galleries of Scotland and Dobbies Garden Centres, joins this month as marketing director and will lead on developing the Parsley Box brand and cost-effective customer engagement and acquisition.
Upcoming product releases include further expansion of the food range into meals for two and the launch of sides and snacks to increase average order values.
The group has also begun its strategy to move beyond meals with the first gift hampers selling out for the Queen’s Jubilee, and will launch a new gift range curated for the over 65s market in the second half of this year.
Parsley Box said it remains confident that as one of very few brands solely focused on the “underserved” over 65 demographic.
“The current macroeconomic environment is, however, presenting challenges and therefore we are taking a prudent view for the remainder of the year and we now expect revenue to be in the region of £22.5m.
“Where practical, the group is buying some stock ahead of plan to hedge cost increases whilst balancing cashflow, and has to date minimised price increases for customers.
“These measures together with new product releases and ongoing efficiencies in order fulfilment are expected to keep gross margins ahead of management expectations for the rest of the year.
“The impact on adjusted EBITDA loss for the year is therefore limited, and is expected to improve 44% from last year, slightly below our expectation, at circa £4m. The group remains well funded following the £6.1m fundraising completed in March 2022.”
Kevin Dorren, CEO of Parsley Box, commented: “We continue to navigate a challenging consumer environment suffering from a well-documented reduction in consumer confidence, but continue to make progress, anticipating EBITDA losses for the full year to be approximately £4m, 44% better than last year.
“We remain well funded and confident that our product innovation, recommenced targeted marketing strategies and strong cash position will enable us to retain and grow our customer base in our over 65 target market, and return the group to sales growth in the second half of the year.”