HelloFresh shares plummet 42% after 'disappointing' outlook

HelloFresh shares plunged 42% on Friday after the meal kit-maker reported a disappointing earnings outlook, saying fiscal year 2024 adjusted earnings are anticipated to fall as much as $437.4 million.

Shares of the Berlin-based company closed at 6.86 euros, marking a 46% decline this week.

Friday marked HelloFresh’s worst-ever session to date since its initial public offering in November 2017.

A green Hello Fresh delivery box on concrete. — HelloFresh said Thursday that it expects its 2024 earnings to come in between roughly $382.8 milion and $437.4 million — drastically lower than analysts had anticipated. MKPhoto – stock.adobe.com

After the market’s close on Thursday, HelloFresh reported a dismal 2024 earnings outlook that said it expected adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to dive between roughly $382.8 million and $437.4 million — a stark contrast to the forecast for higher revenue analysts said they expected of the company’s North American market.

The company attributed its projected losses to increased production capacity and marketing expenses, as well as its ramp-up of two new fulfillment centers.

HelloFresh’s annual results are set to be released on March 15.

Ahead of the 2023 fiscal year report, HelloFresh also warned Thursday that its earnings for 2023 would be a let down, at $480 million — down from roughly $521.5 million the year prior.

Analysts at UBS said the outlook was “far worse” than anticipated despite having flagged risks around the meal-kit company’s guidance, according to CNBC.

The adjusted-down forecasts indicated elevated customer acquisition costs are “expected to persist in 2024,” CNBC reported, citing UBS’s note.

Deutsche Bank similarly called the outlook for 2024 “disappointing” and noted the removal of its previously announced targets for 2025, which the company attributed to a “very different operating environment.”

HelloFresh has been struggling to claw back investor confidence since its peak in 2021 — when consumers had more disposable income and were told to stay home during the height of the COVID pandemic.

Its shares were down 70% for 2022, and 30% in 2023.

Hello Fresh meal kits in a cardboard box. — HelloFresh infamously offers steep discounts on its first shipment, which has been attributed to attracting customers. Daria Nipot – stock.adobe.com

Some 7.1 million people worldwide are subscribed to the “ready-to-eat” program, according to the company’s latest figures — down from more than 8.5 million in 2022.

Customers have notoriously signed up for HelloFresh shipments — which contain recipe cards and fresh ingredients to make the meal — due to hefty deals that offer large discounts off the first box.

However, consumers have been known to cancel once they have to start paying full price for HelloFresh deliveries, which start at $45.96 for two meals designed for two people per week.

A spokesperson for HelloFresh told The Post that the company is “shifting the focus in our meal kit business towards existing customers and stabilization of growth, as we built the muscles required for the next leg of growth, this includes the expansion of our physical product, considering a loyalty rewards program launch in certain geographies later this year and the evolution of our pricing and incentives strategy.”

The company rep did not elaborate on which new markets it’s looking to introduce its delivery services in, or how pricing may change as it accelerates growth.

For families of four to have HelloFresh meals at the ready four times a week, they can expect to dish out as much as $159.84 on a weekly basis.