Edinburgh meal delivery firm Parsley Box hit by crippling supply chain issues
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In a trading update, the group told investors that it had taken the “difficult decision” to reduce investment in marketing, warning that this was likely to continue until the “expected short-term supply chain constraints recede”.
The firm, whose shares began trading on London’s Alternative Investment Market (Aim) in March, delivers ready meals that do not need to be stored in a fridge or freezer, direct to the “underserved baby boomer-plus consumer”, broadly defined as those aged 60 and over.
In July, it launched a “premium” chilled range as it continues to ramp up its product offering.
In its latest update, the group recorded 18 per cent year-on-year revenue growth for the eight months to August 31, generating sales of £17.8 million. Products shipped also grew by 18 per cent in the same period, to 7.8 million units.
The firm told investors: “The group, together with the wider retail sector, is experiencing labour issues throughout its supply chain and has been significantly restricted by stock availability at circa 50 per cent of plan.
“Customer service is a core value of the group, and therefore the board took the difficult decision to reduce investment in marketing, and this is likely to continue until the expected short-term supply chain constraints recede.
“As a consequence the group now expects full-year revenue to be circa £25m, slightly ahead of last year, with a consequential impact on the group's loss before tax.”
The board has been “encouraged” by the early signs from the recent product releases and will provide a further update ahead of the group’s full-year close.
Chief executive Kevin Dorren said: "Delivering our product innovation plan remains the focus for the business as we navigate our way through the widely reported supply chain disruption.
“The second half of the year has been further impacted as we took the disappointing decision to pull back on planned marketing investment. However I, and the board, firmly believe that Parsley Box's long-term growth prospects are unchanged."
The group recently served up strong first-half numbers and flagged further growth as it pushes upmarket.
Releasing results for the six months to the end of June at the start of September, the firm reported a 26 per cent rise in revenues to just over £14m, from £11.1m a year earlier. However, higher costs pushed the business to a loss before tax of £5.4m from about £1m in the first half of 2020.
A £1.2m television advertising campaign was launched to build recognition of the brand, prompting a fivefold increase in “awareness levels”.
AJ Bell investment director Russ Mould noted at the time: “While Parsley Box is pleased with the response to its launch of chilled ready meals it is questionable whether this will really move the dial and there is a risk that as it looks to shift to higher price points it loses customers who are turned off by the increased cost.”