The meal kit delivery company HelloFresh is facing increasingly difficult market conditions due to ongoing consumer restraint, prompting the MDAX-listed company to revise its medium-term growth targets. The ambitious plans to generate a turnover of ten billion euros by 2025 and earn one billion euros in adjusted EBITDA now seem far off. The company shared this assessment on Thursday evening, after which the stock price of the Berlin-based company fell dramatically in after-hours trading to 9.85 euros, a decline of 16.9 percent compared to the XETRA closing price.
The current business development suggests that the group is already facing challenges in the current year. For 2024, a drop in adjusted operating income to 350 to 400 million euros is expected, a significant reduction compared to the preliminary operating result of 448 million euros last year. This forecast is far below the expectations of analysts, who had anticipated a significant increase.
Revenue expectations for the year are also subdued, with currency-adjusted growth of merely two to eight percent, following an increase of around 2.8 percent to approximately 7.6 billion euros in 2023. The beginning of the year is likely to be weak for HelloFresh, with just a modest increase in sales in the first quarter and an operating margin that at best is zero or might even be slightly negative. The management attributes this to high marketing expenses and rapid expansion in the ready-made meal segment.
Challenges in the USA, the company's most important single market, exacerbate the situation. Delays in ramping up a new production facility in Arizona and issues in Illinois are impacting operations. In addition, unexpectedly low new customer acquisitions around Thanksgiving have alarmed the company's management, an indicator that customer retention and acquisition are becoming increasingly difficult.
HelloFresh Places Great Hopes in its Ready-to-Eat Product Line, Which Should Become the Company's Largest by 2025. However, Current Developments Signal That the Company Faces Significant Challenges in Realizing this Ambitious Plan. The Review of the Mid-Term Goals and the Resulting Market Reaction Highlight That HelloFresh Must Assert Itself in a Demanding Environment Shaped by External Market Conditions as Well as Internal Operational Challenges.
