Investor enthusiasm for Finsbury Food Group cooled significantly this week as the listed bakery became the latest grocery stock to bemoan the ill winds blowing in the aftermath of Brexit.
A trading statement also revealed a 4% slump in sales at the UK bakery division in the first four months of its new financial year. “Whilst consumer confidence has remained stronger than anticipated, input costs, which are globally priced in dollars or euros, have increased substantially following sterling’s weakness,” Finsbury said.
The business added it had reduced promotional activity and was weighing up reformulating its breads and cakes to keep costs down.
Shares in Finsbury plunged 5.7% on the back of the statement to 117.5p - the biggest one-day fall this year since the EU referendum back in June. The stock fell 11% after the UK voted to leave the EU but had recovered to trade almost 10% up for the year before Wednesday’s trading update.
Finsbury has been transformed by bold acquisitions by the management team - for Fletchers and Johnstone’s in late 2014/early 2015 - with revenues leaping 25% to £319.7m in the year to 2 July.
Morrisons kept up the run of good news this week as the revelation it was reviving the Safeway brand helped the share price rise almost 1% on Tuesday to 219.8p. It follows hot on the heels of the announcement last week that it was launching a store-pick service with Amazon, which sent online rival - and partner - Ocado into a spin. The February supply deal with Amazon, a renegotiation of the Ocado contract in August and a fourth consecutive quarter of like-for-like growth revealed this month all contributed to CEO David Potts’ standing with the City. Shares are up 47% so far this year.
“If traction is gained through these combined routes to market, then more volume will be going through Morrisons’ factories and distribution centres in a capital-light manner so leading us to expect the basis to capture the benefits of positive operational gearing,” said Clive Black at Morrisons’ house broker Shore Capital.
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