Meal kit mania as HelloFresh sales hit £2.5bn

Meal kit subscription business HelloFresh (HFG.DE) has seen sales soar in the last six months, despite the end of lockdown.

Berlin-based HelloFresh on Tuesday said its sales had risen by almost 80% in the first six months of 2021 to hit €3bn (£2.5bn). The company delivered over 490 million meals to its 7.6 million customers.

"The second quarter of 2021 has been a strong success for HelloFresh," said co-founder and chief executive Dominik Richter. "We delivered very meaningful growth across both segments, despite a tough benchmark, given that Q2 2020 was probably the peak lock-down quarter."

HelloFresh said order rates in recent months were "well ahead of pre-pandemic levels, despite the easing of restrictions." The trend suggests pandemic lockdowns have got more people into cooking at home.

Founded in 2011, HelloFresh provides subscription recipe boxes with pre-measured ingredients. The company operates in the US, UK, Germany, the Netherlands, Belgium, Luxembourg, Australia, Austria, Switzerland, Canada, New Zealand, Sweden, France, Denmark, and Norway.

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"During Q2 2021 we have made further strong progress in ramping up our production capacity and infrastructure globally, while launching Norway as a new market, bringing Green Chef as an additional brand to the UK market and extending our HelloFresh Markets offering of high quality curated add-ons to the US," Richter said.

Growth has been stronger-than-expected in the first half of 2021 and HelloFresh upgraded its full-year forecasts as a result. The company now expects revenue to increase by between 45% and 55%.

However, the company downgraded its margin forecasts on higher costs. HelloFresh is speeding up hiring in technology and data roles to cope with the increase in demand, which will squeeze margins to between 8.25% and 10.25%. The company previously forecast a range of 10% and 12%

"We are laying the foundations for reaching our mid-term revenue target of €10bn revenue and charging towards becoming the leading global food solutions group," Richter said.

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William Woods, a senior analyst at Bernstein, said: "We struggle to understand the catalyst for a margin downgrade only 4 months after they raised guidance, and the renewed guidance is very conservative, likely leading to further 'beats and raises'.

"We find the company's explanation of the margin downgrade confusing, and it raises more pressing questions about overcapacity, demand normalisation, operational deleverage, and discounting, which will become more challenging against tough comps in Q1 and Q2 FY22."

Shares rose 4.8% in Frankfurt.

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