Blue Apron Will Venture Beyond Meal Kits: New CEO

For Blue Apron Holdings Inc. (APRN) , it's in with the new and still in with the old.

Co-founder Matt Salzberg has shifted to a role as executive chairman, focusing on longer-term initiatives, new CEO Brad Dickerson said. The executive chairman position allows company founders to remain involved. Salzberg will join the likes of Chipotle Mexican Grill (CMG) founder Steve Ells and Starbucks Corp.  (SBUX) longtime-CEO Howard Schultz in ceding their top spots during turnaround efforts. 

Salzberg's new role will let Dickerson focus on how to actually run the business, Dickerson said at a Raymond James conference Tuesday, Dec. 4.

"That enables me to handle day-to-day decision making, focusing on operational efficiencies, getting the financial model in line to be able to invest in growth and new products, and invest in the long-term vision," Dickerson said.

Dickerson, Blue Apron's former CFO and who had the same job at Under Armour Inc. (UAA) for 11 years, will be expected to improve margins and operations. Founded in 2012, the New York City-based company was the first meal kit maker to go public and the biggest.

By subscribing to a meal kit service like Blue Apron online, consumers cook at home without having to visit the grocery store, as all ingredients —including produce — are delivered to their doors. Since its initial offering at $10 in June, Blue Apron's stock fell by nearly 70% as it struggled to retain customers on top of Amazon.com Inc.'s (AMZN) entry into the grocery space with its acquisition of Whole Foods. In the third quarter, it lost 9% of its subscribers and saw Ebitda reach negative $48 million, compared with negative $34.6 million last year.

 "Cash burn and cash flow should improve in 2018," Dickerson told analysts Tuesday. "We're focused on being Ebitda neutral."

Salzberg's long-term decision making may encompass establishing a brick-and-mortar presence and going beyond meal kits.

Blue Apron more than meal kits?

"The bigger and broader question is, 'what does a brand like us look like beyond the meal kit business?'" Dickerson said. "We have a very, very strong brand that could be taken to other distribution channels...that's beyond just a weekly meal kit."

Blue Apron has the ability to be "multi-channel down the road," he added, pointing to the possibility of a physical outpost for the brand. 

The meal kit company's stock jumped 25% after it announced the appointment of Dickerson as the new CEO. As of Wednesday, Dec. 6, it's trading at $3.67. 

"We have known Dickerson for almost eight years and believe that his focus on operational discipline will drive better financial results," KeyBanc analysts wrote in a note last week. Canaccord Genuity echoed optimism and Barclays analyst Ross Sandler went as far as upgrading the stock Monday from underweight to equal weight because of Dickerson' appointment.

It's the first time Wall Street expressed optimism toward the young company, which, on top of losing customers, saw slow results from spending heavily on marketing. While profitability is still out of the question, all eyes will be on Dickerson to drive up margins and keep operations in tact to get the company back on track for growth. 

But as the company turns a new corner now, competition stiffens. Wal-Mart Stores Inc. (WMT) quietly released more than two dozen meal kit products on its website this week, to be fulfilled by respective meal kit companies as third-party vendors. Amazon last month announced a partnership with Allrecipes.com, a publication owned by Meredith Corp. MDP, that allows the site's readers to purchased the ingredients of featured recipes directly from Amazon Fresh.

Dickerson said he isn't worried about a saturated meal prep market.

"I'm a firm believer in 'rising tides raises all ships,'" he said. "To some degree, a lot of people coming into the space is a validation of the longer-term opportunities in our space."

Walmart CEO Doug McMillon talks company's future.

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