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Blue Apron shares sink as company serves gloomy guidance with Q2 earnings

Shares of meal kit maker Blue Apron Inc. plunged as much as 15% on Aug. 10 as the company said its revenue for the rest of its fiscal year 2017 would be significantly lower than in the first half due to challenges it faces growing its operations.

During a presentation to analysts on the company's fiscal second-quarter results, executives said they expect sales for the second half of fiscal 2017 of between $380 million and $400 million, below the $482.9 million the company reported for the six months ended June 30. The firm also said it expects a net loss of between $121 million and $128 million for the second half of 2017, executives told analysts.

The presentation was Blue Apron's first quarterly earnings call since its IPO in June.

The company reported an adjusted net loss of $31.6 million for the three months ended June 30, following below the mean consensus loss estimate of $29.4 million compiled by S&P Capital IQ and much lower than the net income of $5.5 million that it reported for the same quarter in 2016. It also reported an adjusted loss per share of 47 cents, greater than the mean consensus normalized EPS of 32 cents, according to S&P Capital IQ.

Revenue for the company's fiscal second quarter was $238.1 million, beating the consensus estimate of $235.8 million and about 18% higher than the $201.9 million it reported for the year-ago quarter. Revenue per customer fell to $251 from $264 for the same quarter in 2016.

Blue Apron's lower revenue guidance comes as the company faces challenges scaling its business. CEO and co-founder Matthew Salzberg said delays ramping up production at its new facility in Linden, N.J., are likely to weigh on the company's results for the rest of its 2017 fiscal year.

"Scale is a challenge for our business," he said, adding that the company still has to train staff and adjust its production lines at the new facility. The company may shed as many as 470 workers as it moves to the Linden plant from its existing Jersey City, N.J.-based facility, depending on whether employees decide to make the move.

Both Salzberg and CFO Bradley Dickerson said the company is working on a series of new initiatives designed to drive growth, such as a line of meals that can be prepared in 30 minutes.

In midmorning trading, shares of the company were down 12% to $5.49 on Aug. 10 on the New York Stock Exchange.

That guidance comes even as the executives said they cut Blue Apron's marketing budget, which has ballooned in recent years and pushed up the company's per-customer acquisition cost. The company said it cut its marketing spending by $26.1 million between first and second quarter 2017, according to a news release.

Since its public offering in June, analysts have been critical of Blue Apron's marketing spending. Despite using multiple types of advertising in an effort to attract new customers, the company has yet to become profitable.

Those concerns have been on investors' minds since the company announced its intention to go public. Just before its offering, Blue Apron slashed its IPO price to a range between $10 and $11 from between $15 and $17. In the time since its June 29 offering, the company's stock has sunk about 38%.

In total, Blue Apron's IPO has raised about $279 million, an amount that is "smaller than originally planned," CEO Salzberg told analysts.