Retailers

Premium Offerings Show Promise at Blue Apron, CEO Says

Q2 sales dip and losses accelerate in COVID lap, but metrics are encouraging
Photograph: Shutterstock

Blue Apron officials highlighted the effects of new premium offerings and customizable menus in driving higher average orders during its fiscal second quarter.

Overall sales of $124 million at the New York-based meal kit company in the quarter dipped by 5.4% but were within the range officials had expected. A net loss of $18.6 million—when adjusted for a $4.1 million refinancing charge—and an EBITDA loss of $3.5 million also fell with expected ranges for the period, which ended June 30. The company cycled a 10% sales lift and $1.1 million in net earnings in last year’s second quarter, driven in part by pandemic demand.

Officials reiterated plans to steer the money-losing company to positive adjusted EBITDA in fiscal 2022. Until then, it is making progress on new product initiatives they say are correlated to improving customer metrics, while preserving cash. They expect revenues to grow in a range of high single digits to low double double digits for this fiscal year, with a return to positive sales growth in the current quarter.

“Our second quarter results once again highlight sustained effectiveness of our growth initiatives, in particular, our focus on attracting and retaining high-value customers through ongoing product innovation,” Linda Findley Kozlowski, CEO of Blue Apron, said in a presentation, according to a Sentieo transcript. “Adding variety, flexibility and choice has allowed us to offer more ways to bring Blue Apron into kitchens each week. This has resulted in consistent growth of our customer value as demonstrated by our key metrics, including the third consecutive quarter of record average order value.”

Average order value during the quarter increased by 3% to $62.72. The average customer spend of $300 was down by 0.2% from last year’s third quarter, while orders per customer dipped by 1.9% to 5.3.

Blue Apron’s premium products lines—which Kozlowski described as specialty proteins, foods using advanced culinary techniques and unique flavors—drove repeat visits and higher order values.

A new craft burger offering and a selection of optional “add-ons” like desserts and appetizers, were introduced during the quarter. Only made available for the final two weeks of the period, the craft burger drove a 2% average order value improvement on its own, Kozlowski said.

Her remarks on customer demand for premium foods and health echoed themes also expressed in recent months by peers in the supermarket industry.

“We’re seeing continued elevated engagement with a lot of these value-added products that we continue to build into the business,” she said. “So we’re seeing strength in people looking at some of the premium recipes and add-ons in the customization pieces, and continuing to order those at very elevated levels and enjoy those, and using them for more special occasions.

“We are seeing a bit of a return to health and people getting very, very excited about kind of focusing on their health and focusing on that dynamic,” Kozlowski added. “We continue to see our wellness customers get stronger and stronger when it comes to their overall value to the business. And that menu continues to engage people extremely well.”

Blue Apron stock is down more than 23% this year. It was trading down around 2.7% following the earnings call.

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