Subscription meal kit delivery service Blue Apron, once heralded as a looming threat to grocery stores, is laying off about 10% of its total corporate workforce as it looks to slash $50 million in expenses in 2023, the company announced Thursday.
The company will pay out about $1.2 million in severance payments in the fourth quarter.
Blue Apron’s stock dropped nearly 8% on the news Thursday. Its stock has fallen nearly 94% this year.
The company, in its heyday as a potential grocery replacement for time-pressed consumers looking for home-cooked dinners, had been valued at $1.9 billion after its initial public offering in 2017, according to media reports. Its valuation has since nosedived to just $30 million. Blue Apron shares are now trading at 73 cents, putting the e-tailer at risk of delisting from the New York Stock Exchange.
In May, Blue Apron entered into an agreement for a $40 million investment from an affiliate of Joseph Sanberg, a long-time investor in the company. Sanberg’s group, however, did not follow through with the pledged funding, leaving Blue Apron especially cash strapped.
“While the company continues to assess the ability of Mr. Sanberg’s affiliate to meet its obligations, Blue Apron is actively working with its financial advisors to maximize value from the pledged collateral, including potentially selling or leveraging the pledged collateral to enhance its credit with its current or future lenders,” the company said in a statement.
The staff reduction is designed to “create a more nimble, focused organization,” New York City-based Blue Apron, which debuted in 2012, said in a statement.
Beyond the layoffs, future cost reductions will focus on both near- and long-term expenses to focus on “driving towards profitability in the future.”
Last month, Blue Apron reported it had 679,000 total active customers over the 12 months ending Sept. 30, a decline of 1.3% from the same period the year before. For the third quarter, total customers were down 7.9% year over year.
“We found that our marketing efforts in Q3 were less efficient than in prior quarters, which equally impacted our customer count,” Linda Kozlowski, Blue Apron president and CEO, told analysts, according to a transcript from financial services site Sentieo. “Our products pipeline also remained strong as we continue to innovate and provide our customers with new and unique ways to shop with us.”
In October, Blue Apron started selling its dinner kits on Amazon, with no subscription sign-up required. The company said the move was part of its third-party sales strategy, which included selling its kits on Walmart.com in June.