German meal-kit maker HelloFresh said on Thursday it expected slower growth in the first half due to ingredient inflation, consumer spending cuts and a tough comparison from 2022 when the business was still enjoying a lockdown boom.
But it expects to return to double-digit growth in the second half of the year, it added at its capital markets day.
Higher marketing costs and customer retention challenges have recently sparked doubts about whether the company, which delivers pre-portioned meal ingredients with recipes to subscribers, would be able to maintain its mid-term margin guidance amid reopening economies and weakening consumer confidence.
Higher Marketing Costs
The Berlin-based company, which like other food delivery firms was a big winner of the pandemic lockdowns, forecast 2023 profit below analysts' expectations earlier in March, as it faces higher marketing costs.
The company said it planned to keep existing customers and acquire new ones by broadening its offer and allowing clients to customize orders for 60% of its menu by end of the current year.
It highlighted growth opportunities in its newest ready-to-eat (RTE) segment, which delivers pre-prepared food, saying it plans to launch it in Europe by the end of year.
It targets to double revenues in the segment over the next two to three years compared to current levels.
Through its RTE brand Factor, by summer the company will have two of the three biggest kitchens making freshly prepared meals in the United States, it said.
HelloFresh said it still expects to achieve revenue of €10 billion and 10% core profit (EBITDA) margin by 2025.
It reiterated its expectations of marketing spend at around 15-16% of revenue in the mid-term.
The company saw marketing spend rise to 16.8% of revenue in 2022 from 14.4% in 2021.