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How Has Blue Apron’s Bottom Line Fared?

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EPS versus estimates

Blue Apron Holdings (APRN) has put extensive cost-cutting measures in place to boost its operational efficiency.

The company reported adjusted EPS of -$0.17 in the first and second quarters. Its first-quarter adjusted EPS were lower than its estimate of -$0.24. However, in the second quarter, its EPS matched its expectations.

In the first quarter, its total operating expenses were down 23.6%, while in the second quarter, its total expenses were down 21.8%.

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Blue Apron’s cost of goods sold (excluding depreciation and amortization) expense rate improved 310 basis points and 400 basis points, respectively, in the first and second quarters due to efficiency achievements in food costs. The improvements were mainly the result of better planning processes as the company’s Linden fulfillment center. Its cost of goods sold as a percentage of its revenue is expected to be 65%–66% in 2018, representing a 500- to 600-basis-point improvement over 2017.

Blue Apron has tied up a multiyear deal with FedEx to further increase its operational efficiency, mainly in the last-mile delivery network.

However, as the company ramps up its advertising expenses to attract customers, its marketing will remain elevated. In the second quarter, its marketing expenses increased slightly to $34.6 million. In the third quarter, however, its marketing spending is expected to be 17%–18% of its net revenue.

Going forward

For the third quarter, Blue Apron expects adjusted EBITDA of between -$20 million and -$25 million. Its net income is expected to be between ~-$40 million and -$45 million.

For 2018, Blue Apron expects its adjusted EBITDA to be between -$65 million and -$70 million.

Blue Apron expects to achieve break-even adjusted EBITDA in 2019. It has continued to emphasize the possibility of its adjusted EBITDA breaking even as early as in the fourth quarter of 2018 driven by its extensive restructuring initiatives.

For 2018, its net income is expected to be between -$135 million and -$140 million. Its net income in 2017 was -$210.1 million.

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