Royal Mail: Embarrassingly Late To The Party| MENAFN.COM

Thursday, 11 August 2022 03:36 GMT

Royal Mail: Embarrassingly Late To The Party


(MENAFN- ValueWalk)
sergeitokmakov / Pixabay

An analyst commentary on Royal Mail PLC (LON:RMG) from Freetrade Senior Analyst Dan Lane.

Royal Mail Is Late To The Party

There's a real urgency about digital transformation this morning but you can't help feeling Royal Mail is embarrassingly late to the party.

“We have no time to waste” is a nice sentiment and those parcel hubs and better online services can't come quick enough but the world already saw the direction of travel long before Covid hit.

Cliff Asness Of AQR At Morningstar Investment Conference

Over the years and during times like the volatility that has swept the market year to date, the best hedge fund managers display their adaptability. Being able to move and change with the times is essential when it comes to investment management. AQR co-founder and CIO Cliff Asness joined Ben Johnson of Morningstar to discuss Read More

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q1 2022 hedge fund letters, conferences and more

So, rather than management's assertion that the pandemic has shown us all how customer needs can change, in reality the only people surprised by it all is them.

Our increasingly paperless world was already moving towards email and text confirmations, online vouchers and newsletters so Royal Mail's future was always going to be in parcels.

The pandemic brought that trend forward and heightened it. And it looks like that boom in parcels over lockdown is sticking around at least for now. But, sooner or later, demand for testing kits will vanish and that pull-forward effect will fade.

That means there is a very possible scenario where letter volumes stay low and the parcels business falls too.

That's something Royal Mail can't afford to let happen. And with such sluggish margins, no wonder the firm is doubling down on parcels and business efficiencies.

Shareholders will want evidence of real value now though. We've had the group's buybacks and special one-off dividend now. Investors will need to see that cash being put to good use rather than being returned to them. Management can't afford to wait for another big event to jolt them into action, it has to happen now.

Updated on May 19, 2022, 1:32 pm

MENAFN19052022005205011743ID1104243318


Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.