HelloFresh Profit Warning: Negative For High-End Consumer Issuers

HelloFresh (HFG GY) is indicating as much as 20% lower in pre-market after last night’s profit warning. Weak indicator for high-end grocers across UK, Germany.

• FY23 results are due on 15-Mar but the company has pre-announced that revenue and adj EBITDA will be broadly in line with expectations. However, 1Q24 trading looks much weaker (barely breakeven at adj EBITDA level).
• FY24 is going to be a big miss and mid-term guidance has been removed. FY24 adj EBITDA is indicated at EUR350-400m (consensus: 568m,so results will miss by around 34%). The FY25 targets (EUR10bn of revenues and 1bn of adj EBITDA) are being ditched.
• HelloFresh is not a credit name but this is a small indicator of weakness at the upper-end of the consumer staples market. Downtrading towards budget grocers has been an obvious trend for some time so this indicates both weak consumer spending (US, Germany, UK) alongside aggressive discounting. Marginally unhelpful for companies like M&S, Waitrose, Ocado, Rewe, Edeka and Kaufland.

Conf call is ongoing at https://www.webcast-eqs.com/hellofresh20240308