Trading update

Parsley Box shares plunge on plan to raise funds

Parsley-Box-founders

Parsley Box co-founder Adrienne MacAuley with CEO Kevin Dorren

Shares in Parsley Box, the ready meals company, plunged 15% after it announced plans to raise funds in the new year.

The board, which has seen its value slump since its IPO in March, said certain members of the board together with their associates have indicated their intention to invest, “demonstrating their strong support for the company.”

The plan was announced in a trading update in which the company said it is on track to deliver full year revenue marginally over the £25m forecast, representing modest year on year growth.

However, the shares closed 6.50p lower (15.12%) at 36.5p , valuing the company at just £20.8m compared to an issue price of 200p at the IPO when the firm was capitalised at £83.8m.

The company, chaired by Chris van der Kuyl, provides ready meals to the older Baby Boomer market and has appointed former John Lewis Partnership manager Simon Russell as managing director. He will be responsible for customer service, product development and the day-to-day running of the UK business.

AJ Bell investment director Russ Mould said: “The worst performing IPO of 2021 is going from bad to worse. Parsley Box is getting ready to go cap in hand to investors to ask for more money to help get the business back on track.

“The share price has fallen again because the market has taken the view that a troubled company will only be able to raise more money if new shares are issued at a big discount.

“Parsley Box has been a real flop since listing, with the shares now down 81% since its March IPO thanks to two horrific trading updates.

“First it said that sales growth had been hit by the end of lockdowns, with consumers having more freedom where to shop and eat. Then it suffered from supply chain problems hitting stock availability.

“One could draw the conclusion that as a small player it wasn’t seen as a key client for suppliers and so didn’t get the type of preferential treatment which a big player would get in times of crisis.

“Parsley Box says it has now relaunched half of its entire product range with new recipes. That is not a ringing endorsement for its meals, as a relaunch normally suggests sales have been sluggish and so something must be done to get the tills ringing again.

“The company’s key problem is that it doesn’t have a unique selling proposition. It provides meals for old people that can stay on the shelf for a long time without having to be put in the fridge or freezer. Fray Bentos has already cornered that market and there is plenty of competition from supermarkets for individual meals that are either frozen or chilled.

“Companies like Cook and Wiltshire Farm Foods are thriving from selling posh ready meals to the older generation, so Parsley Box is left fighting for space in what is already a well-served industry.”

Despite the market’s adverse reaction, Kevin Dorren, CEO of Parsley Box said: “I am pleased to announce that we have delivered on our revised 2021 plan.

“The supply chain issues, widely felt across the food sector, need hour-by-hour focus and Simon’s appointment will allow us to continue providing excellent service to our existing customers, without delaying our longer term plans to deliver a platform for independent living.

“At the IPO in March, we stated our intention to appoint high-calibre talent to build the right infrastructure for future growth and Simon will play a key part in this.

“I am looking forward to announcing the investment plan in the new year to outline the next steps in Parsley Box’s development.”

The board said it is pleased to report that trading performance running up to the year ended December is in line with the 30 September trading update.

The year-end cash balance is expected to be approximately £2.2m.

Parsley Box has worked collaboratively with its key suppliers and said it has received good support in rebuilding stock levels over recent weeks.

The board continues to monitor the impact of the Omicron variant on the supply chain and remains cautious about balancing marketing activity and stock availability in the near term to continue managing customer service levels.

As stated in the September trading update, customer service is a core value of the group, and therefore the board took the difficult decision to reduce investment in marketing in the second half.

Marketing spend has been cut by about a third in the second half compared to H1 whilst stock availability was significantly constrained, resulting in approximately 20% lower order numbers and therefore revenue in H2 compared to H1.

The lower stock levels impacted average order values for much of the second half, however these have been recovering well in recent weeks as stock availability improves. 

Furthermore, 50% of the group’s product range has been relaunched with new recipes and new dishes added, extending the range by 20%, also supporting recent higher average order values.

New appointee Simon Russell will be responsible for customer service, product development and the day-to-day running of the UK business. The appointment will enable chief executive Kevin Dorren to increase his focus on developing the group’s business and in particular strategic growth opportunities.

Mr Russell was responsible for John Lewis Partnership’s ‘shop of the future’ vision from both a customer experience point of view and a business operating model. He brings a wealth of omni-channel retail experience to his new position at Parsley Box.

Prior to joining Parsley Box he ran his own retail consultancy advising investors, retailers and start-up businesses on omni-channel strategy, digital transformation and turnaround, growth and financial sustainability.

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