AS I SEE IT: TERRY MURDEN
Lockdown easing has not helped the ready meals firm + benefits of repurposing the former Royal High School
Many food and drinks businesses are getting back on their feet following the easing of restrictions, though the steady return to ‘normal’ patterns of consumer behaviour is doing nothing for one of Scotland’s recent market listings. The optimistic forecasts served up by Kevin Dorren and Chris van der Kuyl for their direct to consumer meals service Parsley Box are looking more than a little over-cooked.
Since the IPO on the Alternative Investment Market on 31 March there have been a succession of downbeat statements on demand slowing, a widening of pre-tax losses, and supply chain difficulties.
Despite the Edinburgh-firm’s problems, Mr Dorren stated in last month’s interims: “This has been a highly rewarding period for the company, Parsley Box has achieved a great deal since our IPO in March 2021.”
That is not how investors see it. They have lost their appetite for Parsley Box whose shares tanked from their 200p issue price to just 35p by the end of last week, wiping more than £60 million off the company’s £83.8m IPO valuation. This included a 38% slide on Thursday, followed by a further 42.62% plunge on Friday.
That’s a pretty steep fall in just six months and reflects a sharp turnaround from the pre-float excitement that saw the placing over-subscribed. Investors included customers as well as existing and new recruits who were enticed by the offer of shares in the company.
Many of those investors are questioning the firm’s growth potential and Russ Mould, investment director at AJ Bell went so far as to accuse the company of “failing to live up to the hype”.
Net proceeds were to be used to accelerate its growth plans primarily through investment in marketing spend with the aim of becoming a household name in a currently underserved market, but even this has been quickly cut back.
Investors were offered some slight relief on Monday (4th) as the shares edged up a few pence to close at 39p, but giving the company a market cap of just £22.25m, leaving those who bought into the story nursing some hefty losses.
Lesson from the Royal High School
It seems barely believable that after a half-century of indecision a new use has been found for the deteriorating gem that is the former Royal High School in Edinburgh.
The still and quiet building that was at risk of permanent ruin will be filled with sound and joy as a new centre of musical excellence.
Even as this sorry story reaches a happy conclusion there may be some regrets among those who fought to turn it into a luxury hotel, arguing that a five-star or even six-star establishment would have raised the city’s status further on the global travel stage.
In the light of Covid’s impact on the travel trade there may instead be relief among other hoteliers that they have been spared further competition.
There is some symmetry in this outcome. The tourism and leisure sectors have book-ended the east and west ends of the city with the completion of the St James Quarter and Johnnie Walker centre. Now the re-purposing of the Royal High, together with the office and hospitality development at Haymarket, bring alive two long-neglected sites in the east and west.
Edinburgh’s tourism and retail sectors have been set back by the pandemic and these four developments represent a huge springboard for the city to return to growth.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business