By Kristy Dorsey

Shares in Parsley Box lost more than a third of their value yesterday after the Scottish provider of ready meals warned that staffing issues throughout its supply chain have cut its available stock by half.

In an unscheduled trading update, the Edinburgh-based company said it has taken the “difficult decision” to reduce spending on marketing until the supply chain constraints ease. A spokesman said Parsley Box has stopped actively recruiting new customers in a bid to ensure it can meet demand from existing patrons.

The update came little more than three weeks after the company, headed by chief executive Kevin Dorren, posted half-year results showing a widening of pre-tax losses to £5.4m from £1m in the same period a year earlier. At that time, Parsley Box said it would be lifting prices on “selected” product lines to cope with rising input costs created by supply chain problems.

“Delivering our product innovation plan remains the focus for the business as we navigate our way through the widely reported supply chain disruption,” Mr Dorren said in yesterday’s statement.

READ MORE: Parsley Box warns of price rises as supply chain shortages bite

“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.”

Revenues during the eight months to the end of August were up 18 per cent on the same period a year earlier at £17.8m. The volume of product shipped also grew by 18% to 7.8 million units.

Full-year revenues for 2021 are expected to be in the region of £25m, versus £24.4m in 2020. Parsley Box said this will have a “consequential impact” on pre-tax losses. The company made a loss of £3.2m in 2020, up from £2m the previous year.

House broker FinnCap, which had been anticipating revenues of £32.4m for the current year, said the supply problems have particularly hurt the launch of the “important” chilled product lines. These premium products were introduced in August.

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“We have rolled forward the downgrade into outer years, pending further clarity on what should be a temporary situation,” analyst Nigel Parson said in a note to investors.

“Parsley Box has cut marketing to reflect the supply issues – and to preserve cash. We do not guess when the situation will improve, but we do expect management to run the business to preserve cash.”

Referring to the chilled products line, Parsley Box said it is “encouraged” by the early signs from new releases and will provide a further update before the end of this year.

The company, which delivers direct to the doors of its over-60 target market, joined the Alternative Investment Market on March 31 valued at £84m. The shares, which were initially listed at 200p each, fell by more than 38% yesterday to finish trading at 61p.

Mr Dorren is the company’s largest individual shareholder with an 11.5% stake in the business, followed by his business partner Andrew Veitch at just shy of 8.6%. Co-founder and chief product officer Adrienne MacAulay has an 8% stake in the business, while Parsley Box chairman Chris van der Kuyl owns nearly 5.6% of the issued shares.

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Rounding out the list of top five shareholders, Mr van der Kuyl’s business partner Patrick Burns has a 5.5% stake in the business.

The company was set up in 2017 by Ms MacAulay and her husband Gordon after they struggled to find cheap and easy meals for Gordon’s mother after she moved into a sheltered home.

The company normally offers a menu of about 60 dishes, all in single portions, and also sells desserts, cakes, wine and spirits. It has about 177,000 active customers across the UK, and employs 130 staff at its warehouse in West Lothian and its customer support team in Edinburgh’s Quartermile.

It experienced rapid growth during the early months of the pandemic, when lockdown made it more difficult to visit supermarkets and book online delivery slots. Amid concerns about strains on the social care system, the company says it is well-positioned to help older people remain living independently in their own homes.

“As a provider of meals to that demographic, we still have lots of scope to acquire and interest lots of new customers,” Mr Dorren told The Herald at the time of the half-year results. “One in four of the population is now over 60, so it is quite a large segment.”