Nomad Foods raises guidance for Q4 (NOMD)
Nomad Foods raised its Q4 organic growth guidance to HSD%. October and November tracked up 10%, driven by additional lockdowns in Western Europe. Grocery and frozen food, in particular, have accelerated with restrictions on dining out. The company also raised EPS guidance to €1.34 from €1.31. Nomad Foods also disclosed that it had repurchased $95M of shares in Q4 and $655M YTD, including the tender offer. The company currently has 14% fewer shares than it did at the start of the year.
Nomad Foods is on our Best Idea Long list.
U.K. meal delivery during the pandemic (DASH)
Home meal delivery helped to offset the out of home (OOH) decline in the U.K. during the pandemic. In the following illustration, the contribution to in and out of home snacks, non-alcoholic drinks, and meals can be compared between an average four week period in 2019 in the left-hand chart with period 4 & 5 (~April and May) in the center chart and period 7 & 8 (~July and August) in the right-hand chart. The growth between period 4 & 5 and period 7 & 8 of $0.7B was largely driven by on-premise sales recovering from $1.1B to $1.8B. Over that period take home (grocery) sales declined by $0.4B. Meal delivery was flat between the two 2020 periods but grew four-fold from $0.2 to $0.8B the prior year. Meal delivery added $0.6B YOY in period 7 & 8 while take home (grocery) sales only grew $1.2B, driven in part by the much higher prices of delivery and grocery.
The implication for meal delivery services like Doordash is that delivery maintained sales as on-premise consumption grew. The caveat is that it was still during the pandemic that has driven consumers to eat at home.
Online grocery plateaus (KR)
Total online grocery sales were $8.1B during November as 60.1M U.S. households placed on average 2.8 orders during the month according to Brick Meets Click/Mercatus survey as seen in the chart below. Delivery and pickup represented 73% of online sales during the month. Since March, the repeat intent rate was 83%, up 8% from August and 40%, as customer satisfaction has increased markedly. Comparing November to August, the number of monthly active users grew 3%. The share of first-time users fell to 17% in November compared to 23% in August, which boosts repeat intent.
Online grocery is expected to continue to increase, but the flatlining in recent months may indicate a contraction once vaccines are widely distributed. Of the conventional grocers, Kroger has made the biggest investment in online grocery.
