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Why Analysts Expect Blue Apron’s Q4 Revenue to Fall 26.8%

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Dismal projections

Meal kit service pioneer Blue Apron (APRN) is set to announce its fourth-quarter 2018 results on January 31. Analysts expect the company to report a 26.8% YoY revenue decline to $137.4 million. For the fourth quarter, Blue Apron’s management expects its revenue performance to be similar to the third quarter.

In the third quarter, Blue Apron reported revenue of $150.6 million, missing analysts’ estimate by 4.2% and marking a 28.5% YoY fall. Further, its revenue fell 16.1% sequentially. Blue Apron’s top line was negatively impacted by customer losses and tight competition.

In the third quarter, Blue Apron’s customer base declined 24.5% YoY to 646,000. Its orders plummeted 26.6% to 2.65 million. The loss in customers was blamed on the reduction in marketing spending as the company focused on a multi-channel multi-product approach.

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Way forward

The meal kit service arena now has many players, and as a result, the competition has gotten fierce. Blue Apron is looking to attract more customers through retail collaborations and its on-demand platform.

Blue Apron partnered with Costco Wholesale (COST) to offer the kits at 80 Costco locations. In the past few months, the company has partnered with GrubHub (GRUB), an online food delivery service platform, as well as WW, to sell its meal kits on the platform. Blue Apron’s meal kits are also available on e-retailer Jet.com.

Management is now focused on generating more revenue from what it considers its best customers. It’s focusing on serving this set of customers via product innovation and exclusive services.

Blue Apron has slashed 4% of its workforce and expects this action to result in $16 million in annual savings by 2019. It has also upgraded its Linden fulfillment center operations to boost efficiency.

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