Blue Apron Says It Cut 6% of Workforce for ‘Future Growth’By
Meal-kit seller to take $3.5 million charge, mostly severance
Struggling company’s stock has tumbled since June IPO
Blue Apron Holdings Inc. has cut 6 percent of its workforce as part of a restructuring that Chief Executive Officer Matt Salzberg said was necessary for the meal-kit company’s “future growth” and profitability.
“We identified the need to reduce some roles, open others, and streamline decision making for greater accountability,” Salzberg said Wednesday in a letter to employees. “I’m confident that the changes we made today will make our organization stronger.”
The firings will result in a $3.5 million charge, mostly for severance payments, in the fourth quarter, the company said in a regulatory filing. The job cuts will affect at least 300 people in both corporate and fulfillment center roles, based on Blue Apron’s 5,393 employees at the end of June.
The reductions are the latest sign of trouble at the New York-based company, whose market leadership is under threat. Shares have declined 47 percent to $5.30 since the company’s initial public offering in June. In August, Blue Apron imposed a temporary hiring freeze and fired 14 members of its recruiting team.
There’s also been a flurry of executive departures. Chief Operating Officer and co-founder Matt Wadiak left in July. Human resources executive Kate Muzzatti followed in August. Blue Apron’s general manager of e-commerce, Olivia Mark, as well as head of product Melody Koh -- one of the company’s earliest employees -- also left, according to their LinkedIn profiles.
Blue Apron has been plagued by bad news since Amazon.com Inc. announced its bid to buy natural grocer Whole Foods, overshadowing the smaller company’s planned initial public offering. The deal showed that the well-capitalized Amazon was serious about dominating online fresh-food sales, and added to the intense competition Blue Apron was already facing in the narrower meal-kit space. HelloFresh, the meal-kit company backed by Rocket Internet SE, has been telling investors that it will overtake Blue Apron in the U.S. by the third or fourth quarter, according to a presentation viewed by Bloomberg.
Blue Apron raised less money than it wanted from the IPO, limiting its resources to fight off competitors. The company has also been paring marketing efforts, which resulted in losing customers in the second quarter. Its new fulfillment center -- expected to handle more than 50 percent of orders -- was delayed, which then pushed back expansion plans. Executives warned that the second half of the year would be worse than the first.