Blue Apron CEO sees positive signs amid ‘challenging year’

Struggling meal-kit service Blue Apron is making strides in its turnaround plan but still posted lower sales and net losses for its 2022 fourth quarter and fiscal year.

For the fourth quarter ended Dec. 31, net revenue dipped 0.2% to $106.8 million from $107 million a year earlier, New York-based Blue Apron said Thursday. The revenue result also was down 2.6% from $109.7 million in the fiscal 2022 third quarter, marking the second straight sequential decrease after gains of 5.5% in Q2 and 10% in Q1.

Blue Apron attributed the Q4 year-over-year revenue decline to fewer customers and orders, partially offset by a higher average order value (reflecting price hikes introduced in second-half 2021 and first-half 2022) plus ongoing product innovation and variety. The sequential revenue decrease for the quarter also was impacted by normal seasonal trends, the company added.

Fourth-quarter orders totaled 1.46 million, down 13% from 1.68 million a year ago and a sequential decrease from 1.55 million in Q3, 1.7 million in Q2 and 1.87 million in Q1.

Customer count also fell 11.3% to 298,000 in Q4 from 336,000 a year ago. The number of customers, too, represented declines from 340,000 in Q3, 349,000 in Q2 and 367,000 in Q1.

Still, orders per customer held steady at 4.9 in the fourth quarter—compared with 4.8 in Q3 and 5.0 a year earlier—while average order value (AOV) and revenue per customer increased. AOV came in at $73.15 for Q4 versus $70.83 for Q3 and $63.78 a year ago. Average revenue per customer was $358 in the fourth quarter, up from $340 in Q3 and $319 a year ago.

“The added variety of our menu continues to deliver great value to our customers,” Blue Apron CEO Linda Findley said in a conference call. / Photo: Blue Apron/Linda Findley

At the bottom line, Blue Apron closed out fiscal 2022 with net losses in all quarters. The company reported a fourth-quarter net loss of $21.8 million, or 49 cents per diluted share (44 million weighted-average shares outstanding), compared with a net loss of $26.4 million, or 93 cents per diluted share (28.5 million weighted-average shares outstanding), in the fiscal 2021 quarter.

For the 2022 fiscal year, net revenue fell 2.5% to $458.5 million from $470.4 million in fiscal 2021. The full-year net loss was $109.7 million, or $3.02 per diluted share (36.3 million weighted-average shares outstanding), versus a net loss of $88.4 million, or $3.97 per diluted share (22.3 million weighted-average shares outstanding), in 2021.

“2022 was a challenging year for our business. In the fourth quarter and year-to-date, we've made significant progress in addressing those challenges,” Blue Apron President and CEO Linda Findley told analysts Thursday in a conference call. (Call transcript provided by AlphaSense.)

“We’re effectively managing our cost structure and working towards stabilizing our balance sheet, all while making progress against key customer metrics,” she said. “Most notably, in Q4 2022, we achieved our highest average order value of $73.15. When compared to Q3 2022, this was driven primarily by orders from our strong core customer base, who are responding well to our product offering. The added variety of our menu continues to deliver great value to our customers.”

Blue Apron shipped over 6.5 million orders in 2022 and finished out the year with average revenue per customer of $358 in Q4, a new company record, Findley noted. Total customers for the year came in at about 659,000, down 3% from 2021.

“We believe a portion of the decline can be attributed to the reduction in marketing spend that we began to implement in Q4. We ramped down our brand investment and in preparation for Q1, focused our resources on performance marketing. We're already seeing improved marketing efficiency thus far in Q1,” she explained. “Seasonal and macroeconomic pressures on consumer spending due to the inflationary environment also had an impact on Q4 performance.”

The new Blue Apron PLUS savings program is offered through Verizon's new Play hub. / Photo: Blue Apron

Meanwhile, Blue Apron—which sells meals via online subscription and in stores—is pushing ahead with efforts to win new business and expand. This week, the company unveiled Blue Apron PLUS, a new savings program that offers consumers exclusive deals. The program is available exclusively on Verizon’s new Play hub, which enables users to manage their subscriptions all in one place.

“In addition, we continue to work with DoorDash via their DashMart storefront and have expanded the availability of our Heat & Eat microwavable product to 11 markets in the Northeast, including New York City,” Findley said in the call.

Menu expansion and new product offerings have continued as well. Blue Apron now offers 84 options for various “meal moments,” including meal kits and prepared meals,  and its seasonal boxes “continue to be a hit,” according to Findley.

“In particular, our holiday box has performed exceptionally well, with 2022 gross revenue more than double compared to our 2021 offering,” she said. “This was in part driven by the optionality to purchase holiday themed add-ons. Last week, we added our newest seasonal box, a brunch offering, to the menu available through Mother’s Day.”

This year, Blue Apron has made a number of moves to bolster its financial position. Last month, the company announced an “at-the-market” equity offering program in which may periodically offer and sell shares of Class A common stock, with aggregate offering price of up to $70 million. Funds would go toward general corporate purposes, working capital, operating costs, capital spending and potentially debt reduction.

The ATM offering program came nearly two months after Blue Apron received written notice from the New York Stock Exchange (NYSE) on noncompliance with continued listing standards for minimum average closing price and average global market capitalization. Blue Apron reported the NYSE alert on Dec. 23, about two weeks after announcing plans to lay off 10% of its workforce and implement cost cuts to bolster its liquidity and balance sheet.

Last May, Blue Apron unveiled a plan to expand beyond its subscription service as part of a strategy dubbed “The Next Course,” aimed at establishing a path to sustainable growth, profitability and shareholder returns. The following month, Blue Apron announced the availability of its meal kits on Walmart.com and then in October began selling a selection of meal kits via Amazon.

“In all, we continue to manage our operations to set the business on a path to profitability,” Findley said in the Thursday call with analysts. “Additionally, earlier this month, we announced that the New York Stock Exchange has accepted our plan to regain compliance within 18 months with the global market capitalization listing standard. We are committed to maintaining our New York Stock Exchange listing and being in compliance across all listing standards.”