German meal kit company stock hello fresh On Tuesday, the company reported better-than-expected second-quarter profit and said its ready-to-eat meals business is growing rapidly.
HelloFresh shares were up 20% in early trading, but had given back 10% of those gains to 5.95 euros ($6.52) as of 9:30 a.m. ET.
HelloFresh stock traded on Tuesday, August 13, 2024
According to the financial report released on Tuesday, HelloFresh reported an adjusted advance profit of 146.4 million euros for the three months ended June 30. The figure was down 23.7% from the same period last year, but exceeded the 123 million euros forecast by analysts polled by LSEG.
HelloFresh said its revenue for the quarter grew 1.7% to 1.95 billion euros.
The company noted that its results benefited from the healthy performance of its ready-to-eat meal delivery business, which grew 50.2% year-on-year in the first half of 2024.
HelloFresh has made it a key priority to expand more aggressively into the ready-to-eat category as demand for its meal kits, which encourage people to eat with ingredients provided by a weekly subscription scheme, falls as Covid-19 lockdowns ease in 2021 cooking.
HelloFresh acquired Factor, a company that prepares ready-made meals for delivery, in 2020 for up to $277 million to expand into the category.
The company said on Tuesday that expansion of its ready-to-eat meals category and growth in average order value in North America and international markets “more than offset the decline in order volume in the meal kit product category in the first half.”
However, HelloFresh also said that increased production of ready-to-eat meals is cutting a large portion of costs from overall sales. In the second quarter of 2024, its group contribution rate dropped to 24.3%, down from 28.4% in the same period last year.
HelloFresh shares have fallen sharply over the past year amid rising interest rates and doubts about whether the company’s business model can match the massive growth rates achieved during the pandemic. HelloFresh shares have fallen 75% in the past 12 months.
HelloFresh shares plunged 42% in March, having its worst trading day yet, after the company’s 2024 annual profit outlook disappointed investors.
Analysts at UBS said at the time that while HelloFresh’s guidance had revealed risks, the company’s outlook was “much worse” than expected.
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