NEW YORK, NY - Blue Apron announced it will continue to cut expenses after its Q2 financial report was met with frustration by investors. Less than two months after launching its highly anticipated IPO, the meal kit purveyor saw its stock prices sink by nearly 50 percent. With profits continuing to sink, Blue Apron said it will now be making cuts to its marketing budget and plans to grow menu options.
“We are beginning a new chapter as a public company, and remain focused on our long-term strategy to build an iconic consumer brand, develop a more diverse product portfolio, and further build out an end-to-end supply chain platform,” CEO Matt Salzberg shared in a statement accompanying the financial report.
Blue Apron’s June IPO was already off on the wrong foot, launching at a lower-than-expected price of $10 per share. And, according to Bloomberg, this disappointing start, combined with the marketing spending that went into promoting it, left investors unsatisfied. The source reported in its conference call with investors, Blue Apron executives warned this trend would likely continue into next quarter as the company keeps combatting a loss in its customer base and investing in new fulfillment tech. Bloomberg also noted this downward trend will halt planned expansions in its menu offerings.
“These complexities have arisen within the last month,” said Chief Financial Officer Brad Dickerson during the call, noting the company’s difficulty in attracting and retaining customers. “Because of these factors, we’ll be reducing our marketing spend in the back half of the year, an obvious additional impact to the business’s top-line growth.”
In the second quarter, Blue Apron said its marketing spending declined by 43 percent, which in turn decreased its total number of customers. Bloomberg set Blue Apron's customer base at 943,000 customers for the end of June, about a 9 percent decline from March's numbers. CNBC also reported earnings per share for the quarter were down 47 cents per share.
In response, the company has lowered its expectations for the second half of the year, predicting sales of between $380 to $400 million, Bloomberg says. Investors adjusted their holdings as well–shares were down 18 percent, hitting $5.14 by the end of New York trading. This price is almost 50 percent of the $10 share price at the launch of the IPO.
As one of the biggest names in meal kit delivery, industry eyes will continue to be on Blue Apron as the company's competitors look towards their own IPOs and investments. Stay tuned as we follow this developing story.
