Part of the reason for the rapid decline is that Blue Apron has been experiencing delays in production from its new factory in Linden, New Jersey. These delays hurt the company's ability to gain new customers and retain existing ones. Blue Apron expects to eventually put out more than half of the meal kits it sells from this factory in Linden, even though this past quarter it contributed only 3% to the national volume. However, Blue Apron expects this location to be the company's most efficient center.
While Blue Apron shares have tanked in 2017, they immediately climbed after the company beat second-quarter revenue expectations in its first report as a public company. But shares then took another dip during the earnings call when the factory delays were further detailed. According to CFO Brad Dickerson, these delays have "changed [their] strategic approach in managing the business for the remainder of 2017." The new expected revenue is somewhere between $380 million to $400 million, with a net loss of $121 million to $128 million. Blue Apron has stated that these delays will hurt the company's bottom line in the near-term, particularly its metric of net profit per customer.
The company will now refocus its strategy on offering its smaller-scale plan, which offers two to three meals a week instead of the initial two to five meals that were planned. This refocused strategy is a response to multiple ongoing problems: Amazon became a competitor to the meal kit company; Blue Apron lost its CEO in July, and its stocks continue to plunge further. Blue Apron is hoping to pull back its market spending and refocus on retention and monetization of its current customer base.
Blue Apron has also experienced pressure from its cost of goods sold, which have increased 28% year-over-year for this quarter as costumers apparently favor more expensive ingredients (particularly steak). Additionally, Dickerson commented that the company will be lowering its capital expenditures guidance in its upcoming 10-Q.
Overall, the company is not doing particularly well; however, they have been quick to take measures and hopefully they will see rising share prices in coming months.