Blue Apron, the home meal kit delivery service, paid off its debts and plans to streamline its business with job cuts, restructuring and a sale of assets to fellow meal company FreshRealm.
The crowded meal-kit business has suffered post-pandemic, so Wall Street reacted enthusiastically to the retool. Shares were up about 72% in late afternoon trading Friday to more than $9 -- although the climb came a day after an announced one-for-12 reverse stock split sent Blue Apron shares into the red Thursday.
Blue Apron is one of the bigger and better-known of the meal preparation and delivery services that launched over the last decade. Initially targeted to time-pressed home cooks, such meal services boomed during Covid-19.
However, companies like Blue Apron now face slowing growth amid increased competition as customers return to regular life. Inflation and rising food prices are also contributing to the slump.
In fourth quarter of 2022, the company's total customers declined 11.2% from the year prior.
But with the sale of its "operational infrastructure" to FreshRealm, BlueApron received $25 million in cash upfront and is eligible to receive up to $25 million more if the company reaches certain milestones, a release said Friday.
"Blue Apron is now an asset-light company, focused on the growth of its direct-to-consumer business," the company said, adding it "expects to accelerate the expansion of its product offerings, including the addition of new convenient options." With an asset-light company comes "a reduced headcount and administrative cost," it said. It did not disclose the number of jobs eliminated.
With the cost cuts, Blue Apron "believes this will allow it to get to profitability quicker" and focus on marketing and branding. FreshRealm will be the exclusive supplier of Blue Apron kits and was already the manufacturer for Blue Apron's popular "Heat & Eat" meals.
Blue Apron, which launched in 2012, had announced it was selling its operational infrastructure to FreshRealm in May.
In the first quarter of 2023, Blue Apron's net revenue decreased 4% year-over-year to $113.1 million, driven by a decline in customers and orders. "We recognize that while we continue to make improvements to our fundamentals, we need to bring more liquidity into the business in the near-term," Linda Findley, Blue Apron's president and chief executive officer, said in a May release.
