Blue Apron said Thursday that unforeseen challenges rolling out a new factory combined with raising less money than expected from its June IPO may hurt its business for the second half of the year. Brad Dickerson, Blue Apron’s CFO, said the company has experienced “unexpected complexities” in just the last few weeks with the transition to a new, bigger factory in Linden, New Jersey.
The meal kit delivery service is currently operating two fulfillment centers in New Jersey simultaneously as it transitions to the Linden facility, adding some complexity and cost. It’s also currently training 5,000 employees across its fulfillment centers on new systems, cutting into employees’ daily output.
This issue is compounded by Blue Apron slashing its IPO price at the last minute to attract investors. It raised about $300 million from the public offering, hundreds of millions less than it initially expected.
The result, according to Dickerson, is Blue Apron “will be reducing our marketing spend in the back half of the year, which in turn will have an obvious additional impact to the company’s top line growth.”
Blue Apron now expects its sales to be between $380 million and $400 million in the second half of the year, or less than it generated in the first half. The news put a damper on Blue Apron’s first earnings report as a public company. Blue Apron stock dipped as much as 15% in early trading Thursday following the call.
The stock is down nearly 50% from its IPO price of $10 a share. In fact, Blue Apron is now teetering around a $1 billion market value. It’s just the latest road-bump for Blue Apron. Matthew Wadiak, a Blue Apron cofounder, stepped down as the company’s COO barely a month after the IPO.
Amazon agreed to acquire Whole Foods for $13.7 billion just weeks before Blue Apron’s IPO, raising concerns about the e-commerce company’s potential to upend the entire market. Amazon made good on that threat a few weeks later by filing a trademark for a similar prepared food-kit service.
Blue Apron also faces a host of well-funded startup competitors, including Plated, HelloFresh, Sun Basket and Home Chef.
“Certainly we have competition,” Matt Salzberg, Blue Apron’s CEO, said on the earnings call. “It’s our job as a company to outcompete competition.”
To that end, Blue Apron recently created a consumer products team to innovate across its supply chain, packaging and meal offerings.