NEW YORK (Reuters) – Blue Apron Holdings Inc (APRN.N) shares jumped 9 percent in premarket trading on Tuesday after the meal-kit maker reported a smaller-than-expected drop in sales and a tick up in average revenue per customer in the fourth quarter.
The company had cut marketing spending following a costly distribution hub switch and turned its focus to squeezing more sales from existing users.
Average revenue per customer rose to $248 from $245 in the third quarter and $246 a year earlier, even amid fierce competition from meal-kit rivals and Amazon.com Inc (AMZN.O). Total orders and customers fell.
Revenue was $187.7 million, down 13 percent but exceeding analyst estimates for $185.1 million.
Founded in 2012, Blue Apron sells subscriptions for pre-portioned meal ingredients paired with recipes for restaurant-style meals, like tilapia piccata and miso-glazed barramundi.
Blue Apron has had a rocky ride since its initial public offering in June, with shares tumbling nearly 70 percent since the company went public.
New facilities, like the distribution hub in Linden, New Jersey, help boost capacity and allow more meal options and formats, adding variety that will help retain customers, Blue Apron has said.
Costs as a percentage of revenue improved from the third quarter, thanks to better recipe planning at Linden and seasonal benefits like cheaper packaging and fewer seasonal food items.
Blue Apron said it was ramping marketing back up by launching a new national brand campaign in the final week of December, which it credited to the improvements at Linden.
The subscription service had 746,000 customers in the quarter through Dec. 31, compared to 856,000 in the prior quarter and 879,000 a year earlier.
Revenue was $187.7 million, exceeding analyst estimates for $185.1 million. Blue Apron had a net loss of 20 cents a share, beating analysts average estimate for a deeper net loss of 27 cents per share, according to Thomson Reuters I/B/E/S.
It was the company’s first earnings report under new Chief Executive Brad Dickerson, who joined as chief financial officer in February 2016 from apparel maker Under Armour Inc (UAA.N).
Blue Apron shares have largely traded below their $10 IPO price and, for the past month, have bumped around the low-$3 range.
Amazon unveiled a deal to buy Whole Foods just as Blue Apron was preparing to go public, gaining what many saw as a food distribution network in the grocery chain.
Amazon has also been selling its own kits, with its website listing meals like tacos al pastor for two, but customers need to pay for an AmazonFresh add-on to Prime membership that is only available in select cities to order.
Blue Apron co-founder Matt Salzberg stepped down as CEO not long after it posted a bigger-than-expected loss in November. He stayed on as executive chairman.
Reporting by Meredith Mazzilli; Editing by Bernadette Baum