The industry has turned out to be an inefficient business model due to high-priced meals, high customer acquisition costs, and low customer retention rates despite the ready-to-cook, pre-portioned meals concept sounds appetizing.
In addition, Blue Apron faces stiff competition from rivals like Hello Fresh, Walmart (NYSE: WMT), Kroger (NYSE: KR) and Albertsons, who have their own weapon in shelves. Due to the availability of plenty of product in the market, the price has been relatively very cheap when compared to the Blue Apron’s stock.
Analysts expect Blue Apron to post a loss of $0.06 per share on revenue of $150.56 million for the first quarter. In comparison, during the previous year quarter, the company reported a loss of $0.17 per share on revenue of $196.69 million.
The company has surprised the investors in the past four quarters as the bottom line was narrower than the analysts’ expectations. It is expected that Blue Apron will follow the lines and report upbeat bottom line results for the first quarter. Majority of the analysts recommended a “hold” rating while expecting the stock to reach $1.54 per share in the next 52 weeks.
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For the fourth quarter, the company reported a narrower loss helped by lower costs and expenses. However, sales fell by 25% due to the ongoing strategic transformation and seasonality. Marketing expenses were lowered by 19% as the company intends to focus on bringing in more loyal and high-value customers and improve customer retention from its direct-to-consumer platform.
Blue Apron continues to struggle on bringing in more customers to its platform. At the end of Q4, it had 557,000 customers compared to 746,000 last year. On a sequential basis, the company lost 89,000 customers, which definitely is a worrying trend for investors.
Shares of Blue Apron opened higher on Monday and is trading in the green territory. The stock has fallen over 48% in the past year and over 25% in the past three months.