Steady as she goes for HelloFresh Group

HelloFresh reported revenue of around €1.83bn for the third quarter of 2024, an increase of 1.9 per cent on the year-earlier period.

The company said revenue growth was driven by continued year-on-year average order value (“AOV”) expansion by 3.8 per cent on a constant currency basis, more than offsetting a slight expected decrease in group orders.

By product category, meal kit revenue decreased in constant currency year-on-year by 9.3 per cent to €1.28bn. “This temporary decline in revenue represents a continuation of the trends from previous quarters, driven by a normalisation in the size of new customer cohorts and by the company’s disciplined focus on achieving a strong return on investment on its marketing spend,” HelloFresh said.

It added that “existing customers continue to demonstrate robust behaviour, illustrated by strong order rates and retention. The Ready To Eat (RTE) product category continues to grow strongly, delivering revenue growth on a constant currency basis year-on-year of 39.9 per cent to €529mn, and rapidly develops into a sizeable and profitable business”.

Looking ahead, co-founder and CEO Dominik Richter said: “In meal kits, our focus for the next couple of quarters will be on improving further on an already excellent proposition to our customers, through more meal choice, better value for money and higher service levels.

“We also aim to meaningfully expand free cash flows and profitability for the Group, and have taken first decisive steps, such as being more selective in attracting new customers to our meal kit brands and adjusting our production footprint. We see these steps starting to reflect in the numbers.

“The biggest growth driver for the group over the next three years, for both revenues and profits, will be our RTE product category. Today, we are already the RTE market leader in the US and have developed the product, technology and food manufacturing capabilities to reach many more people around the world with our RTE products.”

The company said it plans to maintain its strong focus on disciplined marketing investments also in future quarters. As a consequence, it is targeting to acquire fewer, but on average more profitable customers.

“This means that for the fourth quarter of 2024 the company intends to spend less on marketing than in the same quarter of last year, especially in the latter half of the quarter, when the customer acquisition environment is typically seasonally less benign,” HelloFresh said.

As a result, the company has cut its revenue growth outlook for 2024 from 2-8 per cent to now 1-1.7 per cent.