The fortune turned for the company, however, with the onset of the global pandemic forcing consumers into isolation, and disrupting purchasing behavior in a way that favors home delivery. To put this in laymen's terms, Blue Apron was effectively announcing they would accept money in the best form that they are able to negotiate, much like a beggar on the street. In this press release, it was disclosed that Blue Apron was exploring a new raise on the capital markets, asset sales, or a complete sale of the enterprise. I did not expect that Blue Apron would disclose their indifference to mean to achieve the end-goal of liquidity as they did in February of this year following their FY19 disclosure. This is something that I have covered extensively this year, correctly predicting that management would need to undergo a capital raise of some sort, else face bankruptcy in the subsequent 12-24 mo. COVID-19 Was A Short-Term Solution, To A Long-Term Dilemmaīlue Apron was a severely distressed equity prior to the that was verging on bankruptcy with severe liquidity problems and a churning customer-base. I am of the belief that if the company truly felt it had transcended a point of inflection from declines to growth, management would not be guiding for a return to net losses, or continuing to explore the dramatic liquidity initiatives mentioned following FY19. What I found most concerning, however, were the closing statements of the conference call that deliberately called back to comments on the "exploration of strategic initiatives" made in February which could have been interpreted as a desperate plea for cash in any form. When looking to the meta-data found in search trends, as well a history turnover rates, this narrative would appear to be supported. This pessimism was also quite present in the company's forward looking guidance which suggested a 15% sequential decline on a quarterly-basis, implying a significant amount of customer churn. Alongside the boasting came a recurring and poignant disclaimer that a portion of this new business was attributable to temporary changes in consumer behavior. Commentary by management on the subsequent conference call was also highly optimistic with the team asserting the event was a pull-forward in trend rather than a one-time fluke.
The Blue Apron ( NYSE: APRN) 2Q FY20 results were the best reads posted by the company in many years. Customer Churn Looks Likely, As Management Fails To Justify The Stickiness Of COVID-Related Net Additions
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