Blue Apron trims staff by 20% following asset sale

Blue Apron cut 20% of its workforce after completing the sale of much of its assets to FreshRealm in June, the company said in reporting its second-quarter financial results on Wednesday.

Excluding a one-time, non-cash charge of a $48.6 million in the quarter related to the asset sale, the meal-kit delivery pioneer said it reduced its net loss for the period to $13.3 million, compared to a loss of $23.3 million in the year-ago period.

The adjusted EBITDA loss for the quarter was $2.6 million, which the company said reflected the third consecutive quarter of efficiencies. In the year-ago second quarter the adjusted EBITDA loss totaled $16.2 million.

Revenues for the quarter were down 14.5%, to $106.2 million, vs. the year-ago quarter. The company attributed the decline largely to a one-time bulk sale of $10 million in the year-ago period, along with a decrease in customers and order volume following a deliberate reduction in marketing spend.

Marketing expenses were $9.4 million, or 8.8% of net revenue, in the second quarter of 2023, a 57% decrease from the second quarter of a year ago.

Blue Apron said revenues in the recent quarter received a boost from a price increase it implemented in the quarter. Average order value was up 12.7% over a year ago, to $75.66, and average revenue per customer was up 21.3%, to $397, compared with the year-ago second quarter.

Related:Blue Apron cuts 10% of staff amid financial pressures

Under the transaction agreement, which closed June 9, Blue Apron sold its operational infrastructure to FreshRealm for $25 million of upfront cash, with the potential to receive up to an additional $25 million of value upon the achievement of certain milestones. It also subleased its fulfillment centers in Richmond, Calif., and Linden, N.J., to FreshRealm.

The two companies also executed a 10-year production and fulfillment agreement under which FreshRealm will be the exclusive supplier of the company's meal kits. Blue Apron also licensed to FreshRealm certain rights regarding the ability to use the Blue Apron brand in certain retail channels and the right to use certain Blue Apron software.

FreshRealm operates multiple facilities that produce prepared meals for retail partners nationwide, including Amazon Fresh, Everytable, Kroger, Publix, Meijer, and Walmart, in addition to Blue Apron and fellow meal-kit delivery specialist Marley Spoon.

On July 19, the company executed its 20% staff reduction, for which it expects to incur approximately $1.7 million in one-time employee-related expenses, primarily consisting of severance, most of which will occur during the third quarter of 2023. The reductions are expected to drive additional annualized cost savings of about $7 million, the company said.

“We see this transaction as financially beneficial for the company starting in 2024 with a lower fixed cost base, a stronger balance sheet, and new revenue opportunities, including the introduction of a new product line expected in the first half of next year,” said Linda Findley, president and CEO.