Struggling meal-kit provider HelloFresh adjusts revenue projections, resulting in a sharp decrease in stock value.
HelloFresh Lowers Revenue and Profit Guidance for 2025
HelloFresh, the leading meal kit delivery service with WKN A16140, has revised its full-year revenue and profit expectations, citing several factors for the revision.
The company's ready-to-eat (RTE) product segment has experienced slower growth than anticipated, with a mere 3.6% increase in the first half of the year. This slower growth has tempered revenue expectations for the remainder of the year.
Currency headwinds, particularly a weaker US dollar and similar trends in Australian and Canadian dollars against the euro, have also contributed to the pressure on HelloFresh's earnings. As a result, the company has revised its adjusted EBITDA forecast downward from €450-500 million to €415-465 million.
In addition, customer retention issues continue to pose a challenge. Despite improved operational efficiency and reduced customer acquisition costs, high churn rates and lower customer lifetime value (CLV) remain a concern for sustaining revenue growth.
The post-pandemic market normalization has also led to softer consumer demand, resulting in a decline of about 9.5% in meal kit sales volumes in the second quarter. This, combined with competitive pressures, has further contributed to the revenue decline.
The €300 million "ReFresh" program, aimed at enhancing product innovation and customer retention, carries execution risks, including potential margin dilution from expanded menus.
Despite these challenges, HelloFresh has managed to improve profitability through cost control and operational efficiency. However, the persistent revenue headwinds and customer retention challenges have led to a more cautious outlook for 2025 revenue and profit.
The stock has responded negatively to these announcements, with a significant price drop. After stabilizing in recent weeks, the stock fell 3.5% in regular trading before the price drop. The stock is currently down more than 5% on Tradegate compared to the Xetra closing price.
Investors are waiting for a clear trend reversal as HelloFresh navigates these challenges. The company has stated that its earnings situation in the first half was slightly better than the base used for its previous guidance, when adjusted for currency. However, no new information about the reasons for the slower growth in the ready-made meals segment or the impact of currency fluctuations was provided in this announcement.
In a positive note, HelloFresh has announced a plan to increase its share buyback program by €100 million, to a maximum of €175 million.
[1] HelloFresh Press Release [2] Bloomberg [3] Seeking Alpha [4] Reuters [5] MarketWatch
Investors should be cautious about the financial outlook for HelloFresh in 2025, as the company's revised expectations point towards a more challenging revenue and profit landscape. This is due to factors such as slower growth in the ready-to-eat product segment, currency headwinds, customer retention issues, softer consumer demand, and competitive pressures. In the stock market, this has resulted in a significant price drop for HelloFresh shares. However, the company has announced a plan to increase its share buyback program by €100 million, as a potential sign of confidence in its long-term prospects.
