The once-disruptive meal kit leader, Blue Apron, announced that it was looking at a “range of strategic alternatives” as it reported its final quarterly earnings for 2019.
In all, the fourth-quarter results were not great. The company missed earnings per share estimates by 6-cents, losing $1.66 per share. Revenue also sank to unexpected levels with the company missing expectations by $3.4 million for the fourth quarter. Revenues for the quarter slowed by 33 percent year-over-year to $94.3 million and full year revenue sank 32 percent to $454.9 million.
As a part of the report, the company also said it would explore strategic alternatives, potentially combining the business with another, raising capital in public or private markets, going private, selling the company or some mix of “all of the above.” So far, there’s no news on what that would look like.
“These efforts reflect the commitment of the board, management and myself to doing what’s in the best interest of the business, Blue Apron’s shareholders and other stakeholders,” said President and CEO Linda Findley Kozlowski. “Our board has not set a timetable for this process, nor has it made any decision related to any strategic alternative at this time, and we do not intend to comment further on this until it’s appropriate to do so.”
As it works on what those alternatives look like, the company has announced some big changes to operations, starting with the closure of one of three national fulfillment centers. The facility in Arlington, Texas, will close, incurring about $1.5 million in restructuring costs, including severance for the 240 employees. The move would save $8 million annually. It would also divert fulfillment to Blue Apron’s New Jersey and California facilities.
“We’ve always said that continuing to optimize our operations and maintain fiscal discipline are ongoing priorities as we pursue our growth strategy. As a result, we made the decision to close our fulfillment center in Arlington and consolidate the volume to our two larger fulfillment centers,” said Kozlowski.
All this comes as the company sees modest improvement in core customer metrics, namely average revenue per customer and orders per customer.
“In fact, although total customer numbers declined in the fourth quarter, we saw these metrics at their highest levels since the first quarter of 2016, reflecting four consecutive quarters of year-over-year improvements,” said Kozlowski.
She said the company would continue to focus on its offerings and product innovation. Recently, the company announced a plan for meal-prep enthusiasts who want to cook a large batch of meals at one time, plus deeper options for customers who want plant-based meals or functional food and dieters like diabetics and Weight Watchers members.
The company’s stock fell 20 percent on the earnings news and restructuring announcement. At midday, the stock was $3.46, far below the IPO price of $10 seen in June of 2017 when the company burst into the public market promising a sexy new foodservice category. The rise of pre-packaged competitors and logical bundling by grocery stores and other foodservice retailers has done some real damage. But overall, the segment’s flounders suggests that the middle ground between traditional home cooks and restaurant consumers was smaller than the excitement once suggested.
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