Royal Mail (IDS) Share Price Fell 6.90% in a Week – Here’s Why

The Royal Mail share price, also called International Distributions Services PLC (LON: IDS), has fallen 6.90% in the past week, driven by multiple factors. Earlier today, Ofcom imposed a fine of £5.6 million on Royal Mail for failing to meet its First and Second Class delivery targets during the 2022/23 financial year.

The mail and parcels company is annually required to achieve specific delivery benchmarks. This includes delivering 93% of First Class mail within one working day, ensuring that 98.5% of Second Class mail reaches its destination within three working days, and completing 99.9% of delivery routes for each scheduled delivery day.

However, Royal Mail's performance data for the 2022/23 period revealed significant shortfalls in meeting these standards. The company reported delivering only 73.7% of First Class mail on time and 90.7% of Second Class mail on time. Additionally, it completed only 89.35% of the required delivery routes.

Ofcom did consider exceptional circumstances that may have contributed to missed targets, such as industrial action, extreme weather, or other unforeseen events. Even after allowing these factors, Royal Mail's performance in the First and Second Class categories remained subpar, at 82% and 95.5%, respectively.

This substantial and unexplained deviation from its obligations had a detrimental impact on customers, and Royal Mail did not take sufficient measures to rectify the situation.

As a result, Ofcom decided to impose a financial penalty of £5.6 million on Royal Mail. This penalty includes a 30% reduction due to Royal Mail's admission of liability and its agreement to settle the case. 

Royal Mail also lost its 360-year monopoly on delivering parcels from the Post Office branches as the postal service signed deals with its competitors EVRI and DPD. The move was primarily attributed to customer dissatisfaction with Royal Mail’s services. 

News of the loss of the postal service monopoly broke last Tuesday and is one of the primary drivers behind the decline in the IDS’ share price. The Postal service intends to add the two new couriers to the options available across the counter at its branches. 

Royal Mail (IDS) share price. 

The Royal Mail (IDS) share price has fallen 6.90% in the past week. Is it headed lower?