FTSE 100 trades modestly lower as UK GDP disappoints, and Parsley Box readies cash call

“The FTSE 100 took a modest step back on Wednesday as UK third quarter growth figures came in short of expectations, dragged lower by weak exports,” says AJ Bell investment director Russ Mould.

“Investors are preparing to go into hibernation for Christmas and will hope by this time next week we’ll know a lot more about the trajectory of Omicron and the likelihood of further restrictions to contain it, and just how long those curbs will be in place.

“For now the markets, bar the odd day, have just about managed to hold on to the idea that, to employ central bankers’ favourite word of 2021, Omicron’s impact will be transitory.

“If that changes, we could see a more pronounced sell-off in global stocks as growth expectations for 2022 are rapidly reset.

“The disappointing figures on the UK economy were before the Omicron wave hit, so there will be some concern that they represent the calm before the storm and the situation will be revealed to be significantly worse when the fourth quarter numbers are printed.

“Taylor Wimpey nudged higher as it became the latest housebuilder to back down in the face of a probe by the competition authority on escalating ground rents. Leaseholders of its properties which were lumbered with these onerous charges were left struggling to sell or get a mortgage.

“Housebuilders have benefited hugely from state-backed schemes aimed at increasing the number of homes built in the UK and it would be unwise to risk alienating politicians or the public further over this issue.”

Parsley Box

“The worst performing IPO of 2021 is going from bad to worse. Parsley Box is getting ready to go cap in hand to investors to ask for more money to help get the business back on track.

“The share price has fallen again because the market has taken the view that a troubled company will only be able to raise more money if new shares are issued at a big discount.

“Parsley Box has been a real flop since listing, with the shares now down 81% since its March IPO thanks to two horrific trading updates.

“First it said that sales growth had been hit by the end of lockdowns, with consumers having more freedom where to shop and eat. Then it suffered from supply chain problems hitting stock availability.

“One could draw the conclusion that as a small player it wasn’t seen as a key client for suppliers and so didn’t get the type of preferential treatment which a big player would get in times of crisis.

“Parsley Box says it has now relaunched half of its entire product range with new recipes. That is not a ringing endorsement for its meals, as a relaunch normally suggests sales have been sluggish and so something must be done to get the tills ringing again.

“The company’s key problem is that it doesn’t have a unique selling proposition. It provides meals for old people that can stay on the shelf for a long time without having to be put in the fridge or freezer. Fray Bentos has already cornered that market and there is plenty of competition from supermarkets for individual meals that are either frozen or chilled.

“Companies like Cook and Wiltshire Farm Foods are thriving from selling posh ready meals to the older generation, so Parsley Box is left fighting for space in what is already a well-served industry.”

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