NO LOVE AT BLUE APRON

Am I Next? Layoffs and Loses at Blue Apron

Blue Apron, the purveyor of meal-kits, recipes and ingredients, has announced that it will be laying off approximately 300 employees. In spite of the management happy-talk about a “company-wide realignment” and “streamlining decision making for greater accountability,” the move looks like a cost-cutting move to retain interest in its underperforming stock. With Amazon’s acquisition of Whole Foods, Blue Apron can be facing its most formidable competition ever.  

Something-in-a-box appears to be a valid business model for those who like convenience, surprises, and have trouble making decisions, but Blue Apron reminds me of the dot-com boom when almost any concept associated with the internet could be used to raise investment capital with the goal of making the investors rich in a public offering. Even burdened with continuing multi-million dollar losses did not appear to matter only the story counted, and the company’s real customers were the speculative investors that could boost stock prices until management and employees were able to “call in rich.”

Outside of middle-class yuppies and pseudo-elites, I wonder how many people really comprise a marketplace for what amounts to mail-order meal kits? And, if this enthusiasm can be sustained over long periods of time.

While the “something-in-a-box” is a valid business model for those who like convenience, surprises, and may have trouble making decisions, the market for meal kits appears to be limited, both by the concept and the potential competition as there is nothing really proprietary that is protectable other than the codebase used for the platform. 

Am I Next? Blue Apron - Loss since IPO

"In the second quarter, we saw an 18 percent year-over-year increase in net revenue, and a $20.6 million improvement in our net loss between the first and second quarters. We recently strengthened our balance sheet as a result of our initial public offering, convertible note issuance and the expansion of our revolving credit facility," said Matt Salzberg, chief executive officer of Blue Apron. “We are beginning a new chapter as a public company, and remain focused on our long-term strategy to build an iconic consumer brand, develop a more diverse product portfolio, and further build out an end-to-end supply chain platform.”

Red flags are flying at Blue Apron. But, you have to love their way with words in announcing their Second Quarter 2017 Financial Results.

“The second quarter net loss of $(31.6) million was an improvement of $20.6 million compared to the net loss in the first quarter of 2017 of $(52.2) million, reflecting the planned reduction in marketing spend.”

“The year-over-year growth rate in the second quarter of 2017 was lower than the year-over-year growth rate of 42% from the first quarter of 2017, driven by a planned reduction in marketing spend of $26.1 million between the first and second quarter.”

Let’s see if I have this right: Blue Apron planned to reduce their marketing spend by $26.1 million and then congratulates themselves because their second quarter 2017 net loss of $31.6 million is certainly better than their $52.2 million loss in the first quarter of 2017. So by not spending $26.1 million dollars, they reduced their loss by $20.6 million and call it a win?