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Blue Apron CEO: Using Stay-at-Home Tailwind to Grow Post-Virus

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Blue Apron  (APRN)  shares are on a tear in 2020, as the coronavirus pandemic has been a tailwind for stay-at-home services like meal-kit deliveries. But CEO Linda Kozlowski broke down what the company is doing beyond the tailwind to grow for the future. 

After having lost most of its market value since its IPO in 2017 in the face of growing competition and a slowing meal-kit market, Blue Apron has found itself in a much better situation in 2020 with this tailwind. The shares are up 30% for the year, while the S&P 500 has fallen more than 10%. Monday, the stock rose 16% after earnings. 

The company, while reporting a revenue decline in the first quarter, said it expects to grow revenue in the second quarter in the high single digits in percentage terms. After having posted net losses for the past several years, management is looking for an adjusted EBITDA margin of almost 4% for the quarter. And for the year, the company expects to post consecutive quarters of adjusted profits before non-cash expenses and interest and tax.

Part of the strong revenue picture is a growing base of new customers, an important asset the company wants to fully optimize, post virus.  

And if Blue Apron can use the opportunity presented to it by the virus on a sustained basis, the stock may have a lot of upside. It’s currently trading at a valuation below its expected sales for the next year. 

Here’s what Kowzowski said the company is focused on, using the fortuitous tailwind:

“How do we retain customers? A lot of people are getting very excited about meal kits now because they are experiencing the benefits of lower food waste, not having to plan recipes, being able to have these really great fresh ingredients with unique recipes. So, we’re trying to build off of that and use that as a springboard to make sure that we are actually educating more people on the benefits of meal kits. Over the last couple of years and months, we’ve actually changed our product pretty significantly to shortened cooking times, so now half of our recipes take 30 minutes or less, making it a lot more accessible and easier to follow instructions. But then on top of that, we’re bringing in more variety, more choice. We’re changing some of our marketing tactics to better engage some of those new customers that have come in and help them see longer-term benefits for that. And then also [we are] just continuing to meet our customers needs with new healthy options as well, which is something we hadn’t really done in the past.” 

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