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HelloFresh's losses narrow as rising revenues cover marketing expenses

[FRANKFURT] Meal-kit delivery company HelloFresh, a competitor to US rival Blue Apron, reported narrowing losses in the second quarter as faster revenue growth offset heavy spending on marketing to attract new customers.

German ecommerce investor Rocket Internet holds a 53 per cent stake in Berlin-based HelloFresh, which delivers ingredients for home-cooked meals to customers who sign up for monthly subscriptions.

Its biggest market is the United States where it has been spending heavily on discount offers and TV and radio advertising to compete with rivals Blue Apron and Plated, which offer similar meal-kit services.

HelloFresh reported on Monday a 53 per cent year-on-year rise in second-quarter revenue to 230.1 million euros (S$369.6 million), accelerating from a 45 per cent increase in the previous quarter, helped by new customers and modest improvement in margins.

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Its results indicated its total losses narrowed in the second quarter to around 23 million euros, from 34.3 million euros in the first quarter. Losses for the latest quarter are calculated based on first half losses of 57.4 million euros, which HelloFresh also reported on Monday.

The company has been gearing up for a stock market flotation as early as autumn, sources told Reuters in May, after it pulled initial public offering (IPO) plans in 2015.

However, investor sentiment has been chilled by Blue Apron's IPO performance. The company has lost half of its stock market value since its IPO in late June, amid mounting fulfilment costs, declining customers and fears of eventual competition from ecommerce giant Amazon.

HelloFresh said its fulfilment expenses rose 44 per cent in the second quarter, significantly faster than the first quarter.

Active customers in the second quarter rose 54 per cent compared with the same period a year ago, but the number of orders per active customer dipped 2 per cent to 3.7 orders.

Its gross margin rose to 59.4 per cent in the second quarter from 57.6 per cent in the same period a year earlier.