In Q3, the company reported a 21% y/y reduction in marketing spend, which is partially the reason behind the consistent bleed in customers.īlue Apron margins (Blue Apron Q3 earnings deck) Cost-cutting may not provide the answer Blue Apron is stuck in a hard place here: as its number of customers and orders shrinks, the company faces deleverage issues in its procurement and warehouse operations, but without margins and profitability the company can't spend to chase growth, either.
But I think it's this kind of promotional activity that encourages high churn, as customers defect when these promotional rates expire and the much higher standard prices kick in.īlue Apron intro offers (Blue Apron website)Īnd perhaps it's a greater mix of promo (versus full price) customers that are helping to drive down the company's variable margin, down 90bps y/y to 32.2%. A customer can still sign up with $35 off and free shipping reduced from their first box. That's a hefty charge for an at-home meal in this economy.īlue Apron, of course, still continues to rely on introductory promotional offers that significantly reduce these prices. Smaller plans, like 2 servings for 3 meals a week, cost $10/serving. The company's biggest plan - 4 servings with 4 meal recipes per week - costs $128, which comes out to $8/serving - not including a $10 shipping fee.
Amid inflation and recessionary fears, consumers are cutting back on their discretionary spending - and convenient at-home meal kits like Blue Apron are something of a luxury. The company is stuck in a tough place in this macro environment. Active customers, meanwhile, shed 26k quarter-over-quarter, and 27k (-8%) year over year. In Blue Apron's most recent quarter, the company achieved flat revenue growth of $109.7 million. But I think the core of the company's issue is this: is the meal-kit format even still viable anymore? Are customers still going for this type of service?īlue Apron top-line metrics (Blue Apron Q3 earnings deck) The customer bleed continuesīlue Apron is focusing all of its efforts on cost-cutting and liquidity, in a struggle for mere survival (more on that next).
In my view, investors are best off ignoring this year's phantom rally and remaining on the sidelines. It's unclear, however, how much of a lifeline this company has left. Even Blue Apron ( NYSE: APRN), the original meal-kit company that has been struggling for years, managed to take advantage of the resurgence in risk-taking to shoot up ~60% since the start of the year and stave off a delisting from the NYSE (which requires the company to maintain a market cap of at least $50 million and a share price above $1). So far, the 2023 rebound rally has managed to lift up almost all small and mid-cap tech stocks, even those that seemed to be dangling on a lifeline.
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