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Earnings

HelloFresh sees U.S. growth opportunities as pandemic triggers eating at home boom

FILE PHOTO: A basket filled with beers and food from a downstairs barbecue, is lifted up with a string to neighbors, during the spread of the coronavirus disease (COVID-19) in Hamburg, Germany March 28, 2020. REUTERS/Fabian Bimmer

(Reuters) - German meal-kit delivery firm HelloFresh HFGG.DE said on Tuesday it was expanding capacity to keep up with a surge in demand for its products in the United States, and sales worldwide more than doubled in the third quarter.

HelloFresh, which considers the United States as its key market, delivers pre-portioned meal ingredients with recipes to subscribers. Like rivals, such as New York-based Blue Apron APRN.N, the company benefited from a surge in orders in recent months as more people cook at home due to lockdowns.

“The trend towards eating more meals at home accelerated during the pandemic and we consider the key drivers for this to have become permanent,” Chief Executive Dominik Richter said.

HelloFresh reported sales of 970.2 million euros ($1.13 billion) for the third quarter, the upper end of the company’s own forecast range provided last month of 968 million to 971 million euros, and up 120% from a year earlier.

Half of the growth in sales in the third and fourth quarters was coming from customers spending more time at home during lockdowns, while the other half was growth the company would normally have expected organically, Richter told an analysts’ call.

In mid-October the company’s shares hit a record high as it lifted its full-year outlook.

On Tuesday they fell 3.3% by 0939 GMT on some caution about its growth prospects, but have gained about 145% year-to-date.

“For 2021 we remain still sceptical that meaningful growth in active customers will occur,” analysts at JP Morgan noted, saying they expect high churn in existing customers and lower gross additions than in 2020.

HelloFresh said the number of active customers in its U.S. division rose 68.7% year-on-year in the third quarter, while the number of active customers in all its other markets combined jumped by 122%.

Reporting by Linda Pasquini; Editing by Clarence Fernandez, Sherry Jacob-Phillips and Susan Fenton

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