Can Bakkavor Group win friends with salad?
The main UK economic data of the week is scheduled for Friday, when the latest gross domestic product, industrial production and trade numbers are due from the Office of National Statistics, while the company news diary is fairly light.
UK GDP in April is expected to have fallen almost 19% from the month before, following March's 5.8% drop.
“Output in some sectors — such as retail — initially was supported by stockpiling in March, before slumping severely in April," said Pantheon Macroeconomics.
“In addition, many construction sites initially remained open in late March — regulations never forced them to close — before shutting completely in April. And the slump in manufacturing output likely deepened as more time elapsed, due to component shortages and depleted work backlogs.”
But as recent weeks have shown, the pandemic is resulting in an unusual amount of ad hoc corporate newsflow.
There should be a trading update from Bakkavor Group PLC (LON:BAKK) alongside its annual general meeting.
Its last update on 2 April, when sales were reported to have fallen sharply as the lockdown commenced and demand diminished for its salads and food-to-go products.
The supermarket food supplier is now set to be relegated from the FTSE 250 as its shares have dropped around 45% since the start of the year.
But as Bart and Homer Simpson once sang in 1995, “You don't win friends with salad.”
Indeed, Bakkavor's scenario from management for a £25mln fall in underlying profit in 2020.
However, broker Peel Hunt said that “since then we believe that sales have become more predictable and stabilised with the shift from out of home eating to retailers.
“The shift to home eating has been unhelpful (eg, for Meals) as there has been more cooking from scratch and shared meal occasions and fewer visits to the supermarket. Salads will have suffered from this trend as well, but the recent good weather will have stimulated demand.”
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