Shares of Blue Apron Holding, Inc. (APRN -3.47%) were moving higher Tuesday after the meal-kit provider delivered a better-than-expected fourth-quarter earnings report despite losing customers in the period. As a result, the stock jumped as much 25.1% Tuesday morning, but was trading up just 2.4% as of 12:31 p.m. EST, as the market reaction moderated.
For the fourth quarter, Blue Apron saw revenue decline 13% to $187.7 million as its customer count fell 15% to 746,000. Still, that revenue result beat estimates at $185.1 million as the company had said it would scale back on marketing expenses as it dealt with operational problems at its new Linden, New Jersey fulfillment facility.
Gross margin fell 190 basis points to 29.9% due to higher labor costs, though marketing expenses were down 380 basis points to 13.4%. Still, its net loss widened to -$39.1 million, or -$0.20 a share, from -$26.1 million a year ago, but that also beat analyst estimates of -$0.27 per share.
New CEO Brad Dickerson said, "We are methodically implementing operational improvements to drive our business and are encouraged by the progress we've made since last quarter, particularly in margin which contributed to improvement in our bottom-line performance."
Dickerson noted that the company's net loss improved 55% quarter over quarter, and he expected continuing operational improvements in 2018. He even said the meal-kit service could deliver positive adjusted EBITDA as soon as the fourth quarter of this year, eliciting cheers from investors, and projected that trend would continue into 2019.
Dickerson had previously promised to focus on improving margins, and the stock should move higher if he can execute on that guidance. While the company faces increasing competition from Hello Fresh and supermarket chains, it's too early to write it off as a failure, especially with new management at the helm.