My Food Bag growth slips from pandemic peak, profit remains on track

Friday, 19 November 2021

My Food Bag says demand for its deliveries has slipped since the early stages of the pandemic.

My Food Bag’s deliveries have slowed from the surge it experienced during the early stage of the Covid-19 pandemic, but it remains on track to meet its full-year earnings target.

Chairman Tony Carter said that while demand “remained solid” in the first six months of its financial year to September 30, the company’s deliveries weren’t tracking as strong as last year when it benefited from a spike during the nationwide lockdown in the early part of the pandemic response.

My Food Bag delivered 808,000 orders in the first half of this year, down from 849,000 orders in the same period last year. The average order value fell to $121.81 from $124.

The meal kit company, which listed on the NZX in March, experienced a surge in demand in April and May last year as the country went into a nationwide lockdown following the initial outbreak of Covid-19, as many people avoided long supermarket queues and switched to online shopping.

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“Obviously that period was a real spike for us, so we are comparing against that,” said chief executive Kevin Bowler. “Once we stop comparing with that April/May period, we will start to see a more normal growth pattern.”

Bowler said demand didn’t spike to the same extent when the country went into lockdown in late August this year, as people seemed more relaxed about being able to shop in person.

“It was a natural reaction last year and I think this year people are more settled into the effects of the pandemic on their lifestyle,” he said.

Still, he said activity was ahead of pre-pandemic levels two years ago and that was expected to continue.

“I think there has been a massive step change and I think we will just continue to see it in all categories, not just food,” he said.

My Food Bag lifted first-half net profit 25 per cent to $9.4 million, and pre-tax profit by 12 per cent to $16m. Revenue fell 6.5 per cent to $98.4m.

The company said it remains on track to increase its full-year pre-tax profit by 18 per cent to $34.2m.

My Food Bag has seen its costs rise during the first half, however it expects recent price increases will largely offset the impact.

Its profit margin improved to 26.3 per cent in the first half from 23.5 per cent in the same period last year, and it expects the margin to improve further in the second half as it benefits from lower costs for seasonal ingredients.

My Food Bag is seeking to grab a greater slice of the country’s $37 billion retail food sector. It has widened its product offering to give customers more choice for their meals and prompt them to order more often, and in the first half it also started offering grocery products.

“We are stepping into a very large category where I’m sure there is quite a lot of upside for us,” Bowler said.

The company confirmed that it will pay its first dividend as a listed company in December, following its first-half result. Shareholders will receive 3 cents a share, with a 4 cent dividend forecast for the full year. It last paid a dividend to its shareholders prior to listing.

Its shares rose 3.3 per cent to $1.24 in midday trading on the NZX. That lags behind the initial public offering price of $1.85.