A leading retail analyst has said that regulators should step in to protect the financial security of food firms, after Greencore's share price took a hit following the firm's latest trading update.
Yesterday, Greencore said that it had experienced a 'marked reduction' in demand for food-to-go products, as well as suspending its financial guidance for the remainder of the year.
Share Price Hit
As analyst Simon Harvey of GlobalData noted, the company was punished by investors for its approach, with its shares down by around 6% for the day.
"London-listed Greencore has taken the sensible option of suspending financial guidance, and has asked investors to disregard any previous indications over performance, with a wave of others no doubt to follow," Harvey wrote.
"Not only is it difficult to provide accurate assumptions over future performance in this unprecedented environment, but it's also pretty futile given the severe disruption and turmoil from Covid-19 and the uncertainties that now abound.
"More importantly, it would be timely for some drastic measures from regulators to protect food manufacturers, and those in other industry segments, from the current sell-off in stock markets. While Greencore suspended its guidance today, a general suspension of trading would surely be well-received, too?"
Challenging Times
As Harvey suggested, by continuing to trade on the stock exchange, an "already vexed general public" are seeing their retirement savings erode for reasons beyond their control, while the valuation of certain firms is plummeting.
"The London Stock Exchange had already recognised the risks by asking members not to publish financial results more than a week ago," said Harvey.
"And with a global recession a foregone conclusion at this stage, isn't it time that manufacturers, particularly those keeping the country fed, got a helping hand? After all, it will be these same companies, hopefully if they are still around, which will be called upon to support a recovery once coronavirus has been beaten."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
