(Bloomberg) — Royal Mail Plc will target footwear and clothing sellers and carry heavier packages as it competes with an increasing number of delivery companies angling for a share of Britain’s parcel market.
The U.K. parcel division handled 120 million packages in December, a 4 percent increase from a year earlier, Chief Executive Officer Moya Greene said in an interview. Revenue from the unit was unchanged for the first nine months of the fiscal year, with an excess of delivery operators weighing on prices, she said.
“It’s still a pretty competitive environment out there,” Greene said. “We’ve got too much capacity being brought on stream too quickly given the rate of growth in the industry.”
One of the U.K.’s biggest employers and the country’s dominant postal service, London-based Royal Mail has sought to adapt its letter-focused delivery network to more lucrative package handling. Growth in electronic commerce will help drive sales, with retailers becoming more aware of the value that consumers place on reliable and flexible delivery services, Greene said.
“There’s a halo effect that comes onto a retailer if they choose a high-quality delivery partner,” she said. Royal Mail has extended work hours, keeps some offices open on Sunday and plans to expand the variety of items it handles to retain its edge over other providers, she added.
Group revenue in the nine months through December rose 1 percent, excluding changes in currencies, working days and other one-time effects, Royal Mail said today. During the high-traffic period before Christmas, the company added 10 sorting hubs and 19,000 employees on a temporary basis.
Royal Mail jumped as much as 5.1 percent to 425.6 pence, the highest intraday price since Nov. 19, and was trading up 3.5 percent at 9:47 a.m. in London. The stock has gained 35 percent from its October 2013 initial public offering price of 330 pence.