Meal delivery company Blue Apron Holdings Inc. said it will cut about 10% of the company’s workforce – part of a plan to drastically reduce costs amid sluggish sales.
The company expects to cut spending by up to $50 million by 2023 and “create a centralized, more agile organization that better aligns internal resources with strategic priorities.” , according to a statement on Thursday. Blue Apron said it will incur about $1.2 million in employee-related costs due to job cuts. As of June 30, the company had 1,694 full-time employees.
The savings will help the company strengthen its balance sheet to maintain compliance with its minimum $25 million liquidity covenant. Blue Apron is expected to remain compliant through at least the first quarter of 2023 and continue to negotiate with its financial advisors for financial evaluation and other alternatives.
The stock rallied as much as 14% before dropping gains. The company’s market capitalization stands at around $30 million — a far cry from its peak of nearly $1.9 billion after its initial public offering in 2017. The shares are currently trading under 1. dollars, putting them at risk of being devalued. possibility of delisting.
The rapid decline in value underscores the fading appeal of the once-popular business model of providing ingredients to busy consumers so they can prepare their own meals at home. Blue Apron’s quarterly revenue peaked at $238 million in 2017. It reported less than half of that total in its most recent quarter.
The company signed an agreement earlier this year with shareholder Joseph Sanberg to receive funding through a private placement but reiterated on Thursday that it had not yet received the promised investment. The company said it “continues to evaluate Mr. Sanberg’s ability to meet its associate’s obligations,” but now has the right to foreclose on the pledged collateral.
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