Behaviours 'normalise'

Parsley Box shares plummet as it ‘fails to live up to hype’

Parsley-Box-founders

Founder Adrienne MacAuley and CEO Kevin Dorren

Parsley Box Group, the Scottish direct-to-consumer provider of ready meals to the Baby Boomer-plus community, saw its shares fall more than 25% below their IPO price after announcing it expects demand to slow as Covid-19 restrictions ease.

In late-afternoon trade the shares were trading 26.5p or 15.73% lower on the day at 142p compared to their IPO price of 200p.

In today’s maiden trading update following its admission to AIM in March, it said: “Shopping behaviours are beginning to normalise and this has had some impact on sales growth.

“However, the board anticipates that this effect will be short term and is confident that the accelerated shift in consumer behaviour towards our direct-to-consumer model is permanent and that the underlying growth drivers of the business and the favourable demographic trends, remain in place.

“The board expects H2 revenue growth to be substantially ahead of H1, driven by product innovation.”

The company, chaired by Chris van der Kuyl, will publish interim results on 7 September.

Russ Mould, investment director at AJ Bell, said: “One has to wonder if the food sector is jinxed. First, we had Deliveroo’s shares struggle when it joined the stock market earlier this year, now we’ve got another new market entrant failing to live up to the hype.

Parsley Box’s proposition may have appealed to people stuck indoors during lockdown, but now it is finding new customer recruitment harder as Covid restrictions are eased.

“That’s led to analysts slashing their earnings forecasts and the shares trading 25% below the price at which they joined the market in March.

“If people are able and confident enough to get out and about, why use someone like Parsley Box when mainstream supermarkets offer plenty of choice at arguably cheaper prices?”

Kevin Dorren, chief executive, insisted the growth would continue, saying: “The continued growth delivered in the first half of the financial year driven by strong growth in repeat orders has continued our positive momentum and is very encouraging.

“This, together with our key food development hires of Cassandra Suddes and Serena Philipson, gives us every confidence in the growth prospects for our business.   We look forward to delivering the first phase of our product innovation pipeline in H2 2021.”

The directors expect to report unaudited revenue in H1 2021 of over £14m, an increase of 26% over the same period in 2020 and 411% over the previous H1 2019, showing the rapid growth available by focusing on what it sees as an underserved demographic.

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