(Bloomberg) -- Royal Mail Plc's much vaunted turnaround effort appears to be losing steam, with parcel demand entering a sharp decline as Britons begin visiting the high street again with the country's emergence from Covid curbs.
Package volumes fell 13% in the three months through June compared with a year earlier, when the first coronavirus lockdown closed all non-essential retail outlets and forced people to make purchases online. The rate of decline accelerated across the quarter, Royal Mail said in a statement Wednesday.
Chairman Keith Williams said he still expects the U.K. parcel market to re-base to a higher level, with volumes almost 20% higher than before the pandemic. The 500-year-old postal service was among companies to reap a surge in business as the virus kept people at home, boosting turnaround efforts that were already underway amid a long-term decline in letter volumes.
The quarterly figures are “a bit messy given the pandemic distortions,” said Liberum analyst Gerald Khoo, while adding that unchanged guidance for the full year “may disappoint some who expected more.”
Royal Mail shares traded 2.9% lower at 515 pence as of 8:33 a.m. in London, paring gains this year to 52%. The stock surged 49% in 2020.
Total parcel revenues increased due to a positive product mix, the company said, while European parcel delivery service GLS saw volumes increase 10% from last year, though growth slowed as restrictions eased in many countries.
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