Shares of Blue Apron Holdings fell off a cliff on Thursday after the company reported lower-than-expected second-quarter revenue and said its volume of orders in the quarter contracted by 23%.
The meal-kit-delivery firm’s woes in the 13 months after going public continued, with revenue falling to $179.6 million, compared with the average analyst estimate of $188.5 million. In last year’s second quarter, sales totaled $238.1 million.
The company’s shares were down about 20% in early-afternoon trading on Thursday.
As reported by Reuters, the independent meal-kit industry has been rattled by increasing competition not only from peers like HelloFresh, but grocers, who are selling their own ready-to-eat meals. Amazon.com also recently began selling meal kits and launched its own grocery service.
Bloomberg noted that Blue Apron was an early pioneer in the meal-kit market. “But an ill-timed IPO, coming on the heels of Amazon.com’s purchase of Whole Foods and competition from Berlin-based service HelloFresh … have put pressure on customer acquisition costs.”
The company also had problems at its fulfillment center, which was plagued by delays, Bloomberg reported.
The struggles are hardly over. Blue Apron said in its earnings call that it expected third-quarter revenue to decline 29% from the same period last year.
CEO Brad Dickerson said, however that the company is “pleased” with its bottom-line performance. He also emphasized a positive going-forward outlook, calling 2018 “a year of transition and building for the future.”
Dickerson also waxed positive with respect to future prospects. “With fulfillment center operations strengthening, we are increasing focus on the priorities we expect will propel revenue performance and return the business to a growth trajectory,” he said.
Those priorities include “evolving and expanding our product portfolio, enhancing our overall customer experience, and launching our retail and on-demand offerings.”
The company reported a positive trend in the cost of goods sold. Excluding depreciation and amortization, COGS as a percentage of revenue improved 400 basis points from last year’s second quarter, from 68.7% to 64.7%.