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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.

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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.

The company ended H1 with £6.5m in cash and no debt following the £5m fundraising completed by the company as part of its IPO.

Active customers at the period end were at record levels as a result of the substantial number of new customers acquired in H1 2021, albeit new customer additions returned to a more normalised level compared to the unusually high level of new customers in H1 2020.

Repeat customer orders, the key driver for long term profitable growth, showed a significant increase on the comparable period in H1 2020, demonstrating the benefit of the acceleration of customer growth seen in 2020, which also continues to flow through into higher order values.



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