By Geoffrey Smith
Investing.com -- HelloFresh (ETR:HFGG) stock surged in Frankfurt in Monday morning trading after the meal kit delivery group reported strong second-quarter figures that allowed it to avoid any further downgrades to its outlook for the year.
By 05:45 ET (09:45 GMT), HelloFresh stock was up nearly 9% at a four-week high. It has now recovered all the ground it has lost since cutting its profit forecast for the full year in mid-July. However, it has still lost nearly two-thirds of its value since being included in the benchmark DAX index last September, when the tightening of global monetary policy was still to get going in earnest.
The German-based group said it still expects adjusted earnings before interest, taxes, depreciation and amortization in a broad range around 495 million euros for the full year.
Second-quarter figures for the group beat expectations, with active customer numbers up 4.1% on the year at 8 million, Crucially, average order value in the U.S. market, which accounts for just over half of total group sales, more than kept pace with inflation, rising 14.2% even after adjusting for the euro's weakness during the period. International operations, by contrast, only saw a 5.9% increase in average order values, leaving a blended rise of 10.2% for the group.
Meal-kit providers are potential beneficiaries of the squeeze on consumer incomes in so far as they can substitute for dining out. However, as essentially discretionary spending, they are also at risk of people reverting to simpler and cheaper grocery purchases.
The company noted that it too had suffered from higher input costs, which led to the adjusted EBITDA margin falling to 7.5% in the second quarter from over 10% three months earlier.