HelloFresh steps up spending as eating-at-home trend continues

The company hopes that some of the momentum gained during COVID-19, when people were at home and cooking, will stay, given more flexible schedules in a post-pandemic work world

HelloFresh steps up spending as eating-at-home trend continues

Reuters – German meal-kit delivery company HelloFresh said Aug. 5 that it was accelerating investments to tap into strong growth that boosted second-quarter sales, even as pandemic-related restrictions eased in many countries.

HelloFresh, like its U.S.-based peer, Blue Apron, and takeaway food groups Delivery Hero and Just Eat Takeaway, rode an e-commerce boom brought on by COVID-19 lockdowns, as restaurants closed and consumers spent most of their time at home.

“This continued investment into the company’s infrastructure and platform is an important component to achieve its midterm growth ambition,” HelloFresh, which delivers pre-portioned meal ingredients alongside recipes to customers, said.

As a result of the added costs and because new production sites will initially be underutilized, it lowered its profitability forecast for this year.

It now sees its 2021 margin on adjusted earnings — before interest, taxes, depreciation and amortization (AEBITDA) — coming to 8.25 to 10.25 per cent, below its previous guidance range of 10 to 12 per cent and falling short of analysts’ consensus for 11.1 per cent.

At the same time, it hiked its 2021 sales guidance, citing consensus-beating second-quarter growth driven by strong customer growth and continued high order rates.

HelloFresh’s share price slumped earlier this year as investors worried about post-pandemic prospects, but it has gained around 23 per cent over the past three months.

International investment banking firm, Jefferies, in June started coverage of HelloFresh with a “buy” rating, saying it believed that as consumers spend more time at home thanks to flexible post-pandemic work schedules, some would choose to have healthier meals without the hassle of more frequent grocery shopping.

HelloFresh’s sales jumped to 1.56 billion euros (US$1.85 billion) in April-June from 972 million a year earlier.

The company was due to publish detailed second-quarter financial results on Aug. 10.

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