Blue Apron Aims to Deliver Sales Growth Next Year

By Dean Seal

Blue Apron has cut its workforce, pulled back on marketing and handed off manufacturing to another company this year as it transitions into an asset-light business intent on hitting a profitability goal and returning to top-line growth in 2024, the meal-kit delivery company's chief executive said.

Chief Executive Linda Findley said in an interview that the overhaul happening at Blue Apron won't impact the customer experience, but should set the company up for long-term savings and success as it recovers from a post-pandemic decline in demand.

Blue Apron agreed earlier this summer to sell its production and fulfillment business to FreshRealm and use the proceeds to extinguish outstanding debt. FreshRealm will manufacture and sell meal kits to Blue Apron, allowing the latter company to reap the cost efficiencies of FreshRealm's bigger scale and infrastructure.

"They'll pass those savings onto us, and then we can get efficiency within our own [overhead costs] by being an asset-light company because we don't need the same head count that we needed before," she said. "We can be a leaner organization."

Findley said Blue Apron expects to see the financial benefits of the transaction starting in 2024, with a target of achieving adjusted Ebitda--or earnings before interest, taxes, depreciation and amortization--profitability by the second quarter of next year.

As for sales, the company is expecting to return to growth in 2024 as it works to improve customer retention and the efficiency of its pared-down marketing budget.

"We've been able to use marketing dollars more intelligently and we reduced our cost per acquisition by 30% year-over-year and improved our conversion rates by 25% year-over-year," Findley said.

For 2023, the company is forecasting net revenue of $410 million to $415 million, down from $458.5 million in 2022. Blue Apron expects to post an adjusted Ebitda loss of $23 million to $27 million for the year.

Blue Apron's net loss widened in the second quarter to $61.9 million, or $9.52 a share, from $23.3 million, or $8.22 a share on a lower base of shares.

Revenue fell to $106.2 million from $124.2 million in the year-ago period. Analysts had been looking for $109.6 million, according to FactSet.

The company's total customer count dropped 23% from a year ago to 267,000, while its order count was down 18% at 1.4 million. The average order value, meanwhile, rose to $75.66 from $67.14, due to higher prices, with average revenue per customer jumping 21% to $397.

Shares fell 7.6% to $5.23 in midday trading.

Write to Dean Seal at [email protected]

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