Shares in Parsley Box (MEAL:AIM) plunged 19% to 137p after the direct-to-consumer ready meals provider warned sales growth had slowed with the loosening of Covid-19 restrictions.
The Edinburgh-based business also reported strong growth versus tough prior year comparatives boosted by the pandemic as well as record customer numbers.
Parsley Box delivers ready meals that don’t need to be stored in a fridge or freezer direct to the ‘Baby Boomer+’ demographic, so people aged 60 and over.
In its first trading update since floating on AIM in March, Parsley Box said it expects to report sales of over £14 million for the half to June 2021, up 26% on the same period in 2020 and 411% above the sales generated in the first half of 2019 before the pandemic.
Growth was driven by a 75% increase in active customers to 177,000 at period end and, according to the company, demonstrates the rapid growth available by focusing on the underserved baby boomer demographic.
NEW SIGN-UPS SLOW
However, as lockdown eases, new customer sign-ups have slowed, which has impacted on sales growth.
Repeat orders grew by 38.3% to just over 256,000 in the half with average order value up 7.6% to £43.30, but new customer orders fell by 16.6% to 128,737 with average order value dropping slightly to £22.98.
While new customer recruitment is proving weaker than expected as the UK unlocks, Parsley Box believes the effect will be short term.
Second half sales growth is still expected to be ‘substantially ahead’ of the first half, driven by product innovation and continuing progress in repeat average order value.
‘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,’ insisted CEO Kevin Dorren.
‘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.’
Parsley Box closed the first half with £6.5 million cash and no debt, having raised £5 million as part of its AIM flotation in March.
DELIVERING DOWNGRADES
Following the update, FinnCap moderated its growth expectations for Parsley Box and slashed its price target from 220p to 180p.
The broker has reduced its full year 2021 revenue forecast by 10% to £32.4 million, ‘with some impact rolling into the outer years’, although it expects ‘trading to normalise as the novelty of going out again wanes, the third-wave pandemic/pingdemic builds and when the weather breaks in the autumn.’
