Blue Apron Sheds Customers In Q4, Eyes In-Store Push

Blue Apron continues to bleed customers, but its fourth-quarter 2018 revenue beat analyst expectations, and the meal kit delivery service teased about an upcoming product launch as the company moves toward an anticipated profit this year.

For Q4, Blue Apron reported a 25 percent year-over-year decline in its customer base, to 557,000 from 746,000. Orders declined by 24 percent, to about 2.4 million. Average order value for Q4 stood at $58.12 compared with $57.99 for the same period last year. Average order per customer held steady at 4.3, while average revenue per customer increased to $252 from $248 from the same period last year.

“As we sharpen our focus on attracting and engaging consumers who represent high value to the business, we are seeing early, encouraging trends in our customer metrics, most notably average revenue per customer, which increased year over year,” said CEO Brad Dickerson. “Following an assessment of our operational structure in light of this progress, we identified an opportunity to further optimize our processes by transferring a substantial portion of our production volume from our Arlington, Texas facility to our largest and most efficient facility in Linden, New Jersey.”

During the post-earnings conference call with investors, Dickerson talked about the company’s launch of Blue Apron Knick Knacks, which he called “our most flexible culinary innovation to-date created for online and brick-and-mortar retail. This offering also gives retailers an extended shelf life solution, and the ability to cost and cross merchandise their own products, which we expect will increase our addressable market by reaching consumers in innovative ways through diverse channels.”

He said Jet.com will be the first retailer selling Blue Apron Knick Knacks. “The Knick Knacks product came out of our learnings from the Costco pilot last year,” he added.

Fourth-quarter revenue, meanwhile, declined 25 percent year over year, to $140.7 million. According to Blue Apron, that was “driven primarily by a decrease in customers, as the company deliberately reduced marketing spend and strategically invested in consumers who have high potential to be valuable to the business. Net revenue decreased 7 percent quarter over quarter, largely reflecting seasonal trends in the business.” Analysts had forecast Q4 revenue for Blue Apron as coming in at about $137 million.

Earlier in January, prior to the release of Q4 earnings, Blue Apron reportedly teased the possibility that it would become profitable this year — in part due to the fruit of partnerships with the likes of WW, formerly known as Weight Watchers, on healthy meal kits for dieters, a deal announced in December 2018.

At the time, Dickerson said the WW deal gives his company the potential to reach millions of new customers without spending additional funds. Instead, Blue Apron will pay WW a fee when it gets subscriptions through the partnership. He believes this deal will allow Blue Apron to become profitable this year.

For the fourth quarter of 2018, Blue Apron’s loss narrowed to $23.7 million compared with $39.1 million for the same period last year.