Blue Apron Shares Drop to Record Low on Profit Margin Concerns

(Bloomberg) -- Blue Apron Holdings Inc. shares tumbled as much as 22 percent to a record low after an executive’s comments heightened concerns about profit margins at its newest fulfillment center.

At an RBC conference on Tuesday, Chief Executive Officer Matthew Salzberg said the company’s facility in Linden, New Jersey, is “performing as our worst margin operating center because it is very new,” according to CNBC. That echoed remarks he made last week after the meal-kit delivery company reported third-quarter earnings. On a conference call following the report, he said margins at Linden were “significantly lower than the average of our existing centers.”

The Linden center, planned to be the crown-jewel warehouse for Blue Apron with the newest automation technologies and the most capacity, had delays in ramping up, delivering only 3 percent of the company’s total volume in the second quarter. At the end of the third quarter, Linden handled about 29 percent, and as of last week, it was at about 50 percent.

New York-based Blue Apron held its initial public offering in June at $10 a share. The stock fell as low as $3.03 on Tuesday.

After Blue Apron reported results last week, Barclays analyst Ross Sandler downgraded the stock and lowered the target price to $3.

To contact the reporter on this story: Jing Cao in New York at hcao38@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack

©2017 Bloomberg L.P.