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Blue Apron Sinks Further Into the Abyss
When it comes to over-hyped IPOs that crash and burn almost immediately after taking off from the runway, Snap Inc.’s disastrous showing since going public in March seemed tough to beat.
But then along came Blue Apron, which essentially said, “Hold my beer.”
The New York City-based meal ingredient delivery service company, which previously saw its IPO price fall far enough that it became cheaper than one of its meals, fell as much as 22 percent to a record low this week after its CEO revealed that its new fulfillment center in Linden, New Jersey has the company’s lowest profit margins, as CNBC reports.
“Today Linden is performing as our worst margin operating center because it’s very new,” CEO Matt Salzberg said during the RBC Capital Markets Technology, Internet, Media and Telecommunications Conference, according to Dow Jones.
A Blue Apron spokeswoman confirmed the report was accurate.
CFO Brad Dickerson said that Blue Apron experienced “unexpected costs” as it closed its previous facility in Jersey City, 15 miles down the road. Dickerson said that the company is still training hundreds of workers and the center could take months to be fully operational.
In addition to its margin woes, Blue Apron also “saw its number of customers shrink 6 percent in the third quarter from a year earlier, and 9 percent from the previous quarter,” according to CNBC.
But the struggles at its brand new fulfillment center in New Jersey are particularly troubling, as Bloomberg explains:
The Linden center, planned to be the crown-jewel warehouse for Blue Apron with the newest automation technologies and the most capacity, had delays in ramping up, delivering only 3 percent of the company’s total volume in the second quarter. At the end of the third quarter, Linden handled about 29 percent, and as of last week, it was at about 50 percent.
Blue Apron set its IPO price at $10 on its first day of trading in June. It fell to as low as $3.03 on Tuesday.
Photo: Blue Apron