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Blue Apron says demand has jumped during the pandemic but labor is a challenge
Blue Apron
Shares of Blue Apron Holdings Inc. APRN, +10.55% soared 10.5% in Tuesday trading, continuing the up-and-down roller coaster ride of the meal-kit company’s stock that investors have grown accustomed to this year.
The rally comes after the stock plunged 36.5% amid a three-day losing streak, after the company reported third-quarter earnings last Thursday.
Throughout the year, Blue Apron shares have posted both steep stock slides and sharp rises as the company struggles to get on the path to growth and meet coronavirus-related demand.
The stock has experienced 19 double-digit percentage daily gains this year, including a more than doubling (up 148%) on March 18 amid a COVID-19-related surge in demand, to go with 21 double-digit daily declines.
Meanwhile, the stock’s selloff in the wake of the third-quarter report came after Blue Apron posted narrower-than-expected losses, but as results showed that the company was still facing challenges.
See: Coronavirus is driving a new generation of home cooks to Kraft Heinz products
FactSet, MarketWatch
Blue Apron said revenue was hurt by about $2 million after a voluntary recall of onions that were supplied to the company. And the company continues to struggle with the availability of labor, which impacted its third-quarter marketing.
“To be clear, while we believe we have the infrastructure in place to support significantly higher levels of demand, we have experienced labor shortages throughout the pandemic,” said Linda Kozlowski, Blue Apron’s chief executive, on the earnings call, according to a FactSet transcript.
“Because of this, in the third quarter we continued to implement actions first introduced in the second quarter, including canceling or delaying some orders, closing some weekly offering cycles and discontinuing a subset of menu offerings in addition to managing our marketing programs.”
The company is putting procedures in place to address the labor issue, which Kozlowski said lowered the labor minutes-per-box needed by 22%.
Blue Apron guided for fourth-quarter sales in the range of $108 million to $112 million. The FactSet consensus was for $111 million.
The company also announced that it has wrapped a strategic review in light of recent financing, growth initiatives and COVID-19-related demand.
Also: Groupon’s and Blue Apron’s real problem: Neither business model works, experts say
For the year to date, Blue Apron stock has slumped 29.9% for the year to date while the S&P 500 index SPX, +1.78% has gained 4.3% for the period.
