Parsley Box cuts loss but orders, revenue fall

Shares of Edinburgh-based ready meals firm Parsley Box Group plc fell another 30% on Wednesday after the firm issued an update on trading for the first six months of 2022 that revealed lower order numbers and revenue that fell to £9.6 million from £14 million.

Parsley Box — which serves the over 65 demographic — said its marketing spend and overheads have been “purposefully managed” resulting in a 42% reduction in adjusted EBITDA loss to £2.1 million.

Parsley Box joined the stock market in March last year at £2 per share — but the firm has suffered a torrid first year as a public company with its shares falling more than 90% to around 12p and the firm’s stock market value plummeting to around £9 million.

The group has a strong cash position of £5.3m (Dec 2021: £2.5m) and stock levels have been stable throughout H1 with >95% ongoing availability,” said Parsley Box.

“However, the cost of acquiring new customers has continued to increase, reaching £34 in H1 (H1 2021: £31) and the cost of a repeat order has risen to £6 (H1: £3).

“Deploying cost effective marketing spend continues to be a key challenge in the business and the marketing strategy continues to evolve, led by the group’s new marketing director.

“The group has developed a new partnership with the Daily Mail online to acquire new customers through food hamper offers for occasions such as the Queen’s Jubilee and Wimbledon which has opened a new customer acquisition channel that will continue in the second half of the year.

“A new TV campaign will also launch in September and run for the rest of the financial year, but the group will reduce other marketing acquisition activities from Q4 should the high cost of acquisition continue.

“The group’s new membership scheme will launch in August with the aim of providing a new marketing channel for repeat customers which over time can replace the high cost of customer mailings.

“The group will also increase outbound call activity to target a reduction in the customer lapse rate.

The group has also started investigating the potential for nascent B2B revenue channels in the public sector where food security concerns and the rising cost of living are well documented.

“The ambient product range is ideally suited for this sector as it can be stored without the need for a fridge or freezer and heated in the microwave to reduce energy bills.

“Total order numbers in the first half were 212,000 (H1 2021: 385,000).

“As a result of the lower order numbers, the group now expects full year revenue of £19m.

“The full year adjusted EBITDA is expected to remain broadly in line with expectations at a loss of £4.1m, due to careful management of marketing spend in the second half, together with the improved gross margin percentage.

“The group remains well funded and will run the business to focus on cash while seeking opportunities to adjust the ongoing marketing mix.”

Parsley Box CEO Kevin Dorren said: “We have continued our product innovation at pace to increase the opportunities for customers to order from us, and remain focused on balancing investment in customer acquisition and maintaining cash reserves, whilst we navigate the challenging consumer environment.

“We recently brought down the price of a range of customer favourite meals to £2.95 to help alleviate the rising cost of living, and have frozen all prices until September.

“We remain well funded and continue to deliver quality, good value, and nutritious food.”