Despite losing customers for the second quarter in a row, Blue Apron Holdings Inc. received more orders for its meal kits during the period than it did during the same three months of 2016.
The company, No. 197 in the Internet Retailer 2017 Top 500, also got more money per order, showing that customers are making more higher-value purchases. Blue Apron’s sales increased 2.5% to $210.6 million from $205.5 million in the third quarter ended Sept. 30.
Blue Apron beat the highest analyst’s estimate for revenue in the third quarter, reflecting efforts to get customers to spend more each month and sending shares higher in early trading. But the company also reiterated a forecast that indicates growth will slow in the last three months of the year. The shares rose 4.9%, to $4.90, in early trading Thursday in New York.
In the third quarter, Blue Apron reported a loss of 47 cents a share, missing the average analyst estimate of a loss of 43 cents. Blue Apron widened its forecast for net loss in the second half to a midpoint of $134.5 million, reflecting the workforce restructuring charge.
Embattled Blue Apron has lost more than half its value since going public in late June, reflecting increasing competition from upstarts like HelloFresh and behemoths such as Amazon.com Inc. (No. 1), and has also faced challenges in its warehouses. Blue Apron’s pitch to investors before the IPO had been that it could tap into a multibillion-dollar opportunity in offering fresh food online, selling its value on growth.
Instead, sales have been shrinking this year on a quarterly basis and customers have fled while the company pares costs. Last month, Blue Apron cut 6% of its workforce, following a previous round of layoffs and a temporary hiring freeze in August. CEO Matt Salzberg said shrinking the workforce was necessary for “future growth.” Blue Apron has also spending much less on marketing, which is closely correlated with revenue growth.
Blue Apron is in danger of losing its No. 1 spot in the meal-kit category. European rival HelloFresh, which made its market debut in Frankfurt Thursday, expects to surpass Blue Apron this year, according to an investor presentation viewed by Bloomberg. While Blue Apron has been shrinking from quarter to quarter in 2017, HelloFresh grew double digits from the first to the second quarter.
As of September, Blue Apron’s market share receded to 43% in September, from 57% last year, according to an Earnest Research analysis of the transaction data of millions of anonymous U.S. consumers.
Blue Apron’s new fulfillment center in New Jersey has been plagued by delays, which has also affected the quality of deliveries. The Linden warehouse has been key to Blue Apron’s expansion plans—it would be bigger and would incorporate much more automation than existing facilities, enabling the company to offer more options and personalization of its products. These issues have also pushed up Blue Apron’s costs. Since the end of the third quarter, Blue Apron rolled out new products to all its customers and finished moving planned production volumes to the Linden facility, the company said in the earnings statement.
For the third quarter ended Sept. 30, Blue Apron also reported:
- Orders increased 0.2% to 3.605 million from 3.597 million a year ago, but declined 10.6% from 4.033 million in Q2.
- Average revenue per customer increased 7.9% to $245 from $227 a year ago but fell 2.4% from $251 in Q2.
- 856,000 customers, down 5.6% from 907,000 a year ago and down 9.2% from 943,000 in Q2.
- Net loss of $87.2 million compared with a loss of $37.3 million a year ago.
For the nine months ended Sept. 30, it also reported:
- Revenue of $693.5 million, up 19.7% from $579.5 million.
- Net loss of $171 million compared with a loss of $28.8 million.