HelloFresh revenues have fallen amid a drive to reshape the business with higher margins.
Group sales fell 7.8% to €1.5bn (£1.3bn) in the first half, as order numbers declined 12.6% – though the company insisted it would keep its guidance for the full year.
The Berlin-headquartered global meal kit and ready meal business ascribed the drop to a reduction in marketing spend, as it tried to shed low-value customers and reduce its customer acquisition costs.
“The results reflect a deliberate transformation of the business: a conscious choice to prioritise revenue quality and margins over near-term growth,” a statement to investors said.
The benefits of the transformation have yet to be felt, however, as profitability sank. EBITDA fell “as expected” by 24% to €120.6m.
Yet despite the drop, HelloFresh maintained its guidance for the year.
Bloomberg Intelligence analyst Charles Allen said he was “surprised” no downgrade had come.
He added the guidance for full-year adjusted EBITDA of €375m-€425m looked “out of reach” after the fall in sales.
“It would require an EBITDA gain of at least 12% in H2 to meet the low end of the target, where consensus sits, and the company seeks to achieve this via cost discipline alone,” he said.
While average order value growth (excluding retail) accelerated to 5.2% in the second quarter, meal kit volumes deteriorated further, slumping 15.5% in Q2.
According to Allen, that decline suggested the group’s tenured cohort, with whom premium products are more popular, “remained small”.
“A cut in marketing spend to 14.9% of sales, though prudent, will likely see a drop-off in new customers, confirming our view that reported revenue will likely drop 11% this year and a further 6% next year.”
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