Convenience foods group Greencore has reported a 50.6% decline in revenue in its food-to-go business in the third quarter of its financial year, however the division has shown marginal signs of improvement as the summer has progressed.
On a pro forma basis, revenue in the division fell by 52.5% in the quarter.
Encouraging Signs?
Pro forma revenue growth in Greencore's food-to-go business were down 63% in April 2020, following the implementation of lockdown measures and the closure of the HoReCa trade.
In May, meanwhile, pro forma revenue growth in food to go was down 58%, in June, it was down 41% and in July it was down 35%.
'Revenues have recovered progressively as restrictions on population movements have eased,' Greencore said in a statement.
Group revenue growth for the third quarter was down 34.1%, or 36% on a pro forma basis.
Greencore said that COVID-19 had a 'dramatic and volatile' impact on UK food consumption patterns, with the group seeking to align closely with its customers to ' develop and re-activate product ranges as they reopen formats and channels'.
It has recommenced production at its Bow, Atherstone and Heathrow facilities and has also extended production at its Northampton site in line with improving demand trends.
"The decisive actions that we have taken are enabling us to keep our people safe, helping to feed the UK, and protecting our business," said Patrick Coveney, Greencore chief executive.
"Our Group has traded resiliently, with our deep customer relationships strengthened further, and we are encouraged to see a sustained improvement in demand and category mix."
Analyst Viewpoint
Commenting on Greencore's performance, Roland French of Davy said that the company's third-quarter results "highlight an improving revenue trendline since its April lows, with the key Food-to-Go category ahead of our expectations (the July exit rate of -35% was in-line). The stay-at-home economy is negatively influencing consumer mobility and purchasing patterns – the structural impact of these forces remains difficult to predict.
"With evidence of an improving revenue picture, attention will now turn to network and capacity management (operating leverage) and capital allocation (M&A)."
© 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.
