Hellofresh issues stark sales warning after opening UK site shut and 900 jobs at risk

Hellofresh, the recipe box delivery firm based in Germany, has issued a warning that its sales are likely to drop this year.

However, it anticipates an increase in profit as it prolongs its cost-cutting initiative, as reported by City AM.

The company announced in the latter half of 2024 that its cost-saving programme would be extended until 2026.

Hellofresh predicts a decrease in revenue, on a constant currency basis, of between three and eight per cent in 2025.

Despite this, the firm aims to boost its adjusted earnings before interest and taxes (EBIT), excluding impairment, to between €200m (£168.6m) and €250m, a rise from €136m in 2024.

It also expects its adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) to increase to between €450m and €500m in 2025.

In a statement, the group said it concluded 2024 "with a strong financial profile that is reflective of the company's focus on pursuing higher profitability and cash flow generation over volume growth".

For the past year, Hellofresh reported an adjusted EBITDA of €399.4m, a decrease from the €447.6m it achieved in 2023.

Group revenue totalled approximately €7.66bn in 2024, representing a 0.9 per cent year-on-year growth on constant current terms.

Dominik Richter, co-founder and CEO of Hellofresh, stated: "In H2 2024 we entered an efficiency reset period."

"After five years of solid progress, highlighted by a 34 per cent revenue CAGR and an almost 9x increase in AEBITDA, we are now pursuing the next stage of our strategy."

"This stage is initially marked by having to rightsize our cost base across all major categories and improve our unit economics."

The company further underscored its commitment to fiscal management: "Driving strong AEBIT and free cash flow performance will enable us to make strategic investments in our product quality, variety and deliciousness in 2025 and beyond."

Additionally, enhancing customer relations is a priority: "We are confident that levelling up the customer experience and product will contribute to higher retention of existing customers, and to unlocking new customer segments for the group."

Hellofresh is set to announce its full set of results for 2024 on Thursday, 13 March.

As reported by City AM towards the end of October 2024, there were plans to shut down one of Hellofresh’s significant UK sites, jeopardising 900 jobs. The Nuneaton distribution facility is expected to continue operations until mid-2025.

This 237,000 sqft establishment, inaugurated in 2020, was Hellofresh's second location. Previously, in a month before, City AM disclosed that Hellofresh UK notably reduced its pre-tax loss as it approached the £500m turnover milestone and decreased its workforce by 15 per cent.

For 2023, the company posted a pre-tax loss of £755,000 in its Companies House accounts, improving from a loss of £22.1m in 2022.

During the same timeframe, the company's turnover rose from £468.4m to £489.9m. The results also revealed a decrease in Hellofresh UK's average workforce from 2,159 to 1,842 within the year.