Meal-Kit Business Booms in Lockdowns

(Bloomberg) -- HelloFresh SE said it had very strong revenue growth in the whole first quarter, with extra growth in March, in a sign the company is benefiting from an increased demand for its meal kits from customers forced to stay home.

• Adjusted revenue for the 3 months ending March 31 was 699.1 million euros, indicating year-on-year growth of 66.4%, according to a statement Tuesday.
• The German company, which assembles ingredients into boxed meal kits that customers cook at home, also raised guidance despite “very significant macro uncertainties”.
• Full year group revenue growth of between 22% to 27% on a constant currency basis has been raised to 40% to 55% while adjusted earnings before interest, tax, depreciation and amortization raised from 4% to 5.5% to now 6% to 10%.

Key Insights

• The company foresees demand changing slightly when restaurants begin to reopen but consumers have formed home cooking habits that are likely to stick after the crisis, chief executive officer Dominik Richter said in a call
• HelloFresh has a diverse number of suppliers and was able to mitigate any supply chain issues by restricting the number of meal choices available to consumers, Richter said
• Berlin-based HelloFresh said active customers reached 4.18 million in the first quarter up from 2.97 million in the fourth quarter.
• On Tuesday, the company said the implementation of lock-down measures and the closing of restaurants in most of its major markets increased customer demand for home-cooked meals during that period.
• The company’s shares have been among the few European stocks to make gains since a slump in the global equity market accelerated over the last few weeks.
• Shares in HelloFresh have gained 76.7% this year as countries across Europe and many U.S. states forced restaurants to close and imposed restrictions on people leaving their homes.
• HelloFresh’s biggest market is the U.S., and it also operates in the U.K., Germany and the Netherlands.

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