German meal-kit maker HelloFresh has today provided a 2024 core earnings forecast that was way below expectations, shocking investors for a second time after a profit warning in November and sending its shares plummeting almost 50%.
It also scrapped its revenue and profit goals for next year.
Citing higher marketing expenses and the costs of ramping up its ready-to-eat business, HelloFresh said it expects adjusted earnings before interest, taxes, depreciation, and amortisation of €350-400m this year.
That compares with a company-provided consensus estimate from analysts of €568m.
Its shares slid as much as 48% to their lowest in five years and were down 43% this afternoon, on track for their biggest-ever daily drop and bringing year-to-date losses to 55%.
"What we're seeing today is a capitulation in the stock from long-term holders," Sebastian Patulea from Jefferies said.
A pandemic-era darling, which like other food delivery firms was a big lockdown winner, HelloFresh had to increase its marketing costs to retain customers as economies reopened and inflation surged.
"We were wrong in our assumptions that we would be able to maintain our margins at some of the peak pandemic levels," CEO Dominik Richter said on a call with analysts.
He added that the company was "over-earning" in some of its most advanced markets in 2020 and 2021, leading to unsustainably high core profit margins.
The Berlin-based company said it was putting aside its aim for €10 billion in revenue and €1 billion in adjusted core profit in 2025
In November, it cut its profit estimate for 2023, flagging lower-than-expected sales growth and higher costs at its North American unit.
"Our operating brand is clearly different to when we had set these targets," CFO Christian Gaertner said. "It's not realistic anymore to get there by 2025."
JPMorgan said in a note that management's recent poor track record in providing reliable guidance meant investors were likely to shun the stock until results improve.
