Why HelloFresh’s plan to focus on fewer customers (partly) backfires

The prepared meals division at HelloFresh is – as of yet – unable to deliver the hoped-for growth. The company continues to see sales erode due to a focus on fewer, but better customers – but that strategy does have a positive impact on profit.

Fewer orders, more profit

For some time now, the meal box company’s marketing strategy has been to target its ‘high-value’ customers. As a result, fewer new customers are coming in, but existing customers are spending more. This led to another sales decrease in the second quarter, with sales falling 9.5 % to 1.7 billion euros. Margins did improve significantly, however, resulting in adjusted gross profit (ebitda) growing 8.1 % to 158.5 million euros.

HelloFresh has high hopes for Factor, its prepared meals division, but that only grew 3.6 % in the first half of the year – not enough to not offset the decline in meal kit sales (- 14.2 %). An ambitious “ReFresh” program in the United States should improve the quality, choice and personalisation of meal options, revitalising meal kits. Meanwhile, the company does lower its earnings outlook, due to unfavourable exchange rates.